Late last night streaming leader Netflix Inc (NASDQ:NFLX) announced it will no longer partake in the bidding war to purchase Warner Bros Discovery Inc (NASDAQ:WBD), after an extended battle against Paramount Skydance (PSKY). After Paramount's latest offer was noted as superior, Netflix refused to counter, leaving the former to pay the $2.8 billion fee for the breakup.
At last glance, NFLX is surging, up 9% at $92.15, while WBD is pulling back, off 1.9% at $28.26. Netflix stock is distancing itself from a Feb. 23 annual low of $75.01, now headed for its best daily performance since January 2025. WBD, meanwhile, has slipped below its year-to-date breakeven mark and is eyeing a third-straight loss after suffering a a 0.3% post-earnings pullback yesterday. Support at $28 could step up amid the bull flag pattern forming since December.
WBD has received several bear notes in response, including a downgrade to "underperform" from "outperform" at Raymond James. More bear notes could be in the cards, too, with eight of the covering brokerages sporting a "buy" or "strong buy" recommendation.
Options traders have chimed in, with NFLX seeing 418,000 calls and 166,000 puts across the tape so far, seven times the average intraday rate. Seeing the most attention is the March 100 call. WBD has seen 18,000 calls and 23,000 puts exchanged, double the average volume, with the March 24 put seeing ample trading.
Options are looking affordable for both. Netflix and Warner Bros Discovery stock sport a Schaeffer's Volatility Index (SVI) of 41% and 25%, respectively, both of which stand higher than 11% and 7% of all other readings from the past year. In other words, near-term option traders are pricing in relatively low volatility expectations.
