More $WBD Puts
DEC 22s
Yesterday, February 26, 2026, the WBD board officially designated the Paramount Skydance $31 per share all-cash bid as a Superior Proposal. Netflix has walked away. The path is now cleared for a $111 billion takeover.
I’m not interested in the drama of the streaming wars. I’m interested in the structural reality of a $31 cash offer and a stock that is still trading significantly below that mark.
Big trade today: Sold 2,000 $WBD Dec 18, 2026 $22 Puts for $0.40.
That’s an $80,000 credit harvested instantly. Let’s break down why this 294-day play is the ultimate arb for the patient investor.
The Thesis: The $31 Anchor
The Deal Physics: With a $31 all-cash offer from Paramount (backed by the Ellisons’ deep pockets), the intrinsic value of the company has been recalibrated. Even if the deal hits regulatory headwinds, the $7 billion termination fee Paramount agreed to pay acts as a massive cushion for WBD’s balance sheet.
The $22 Moat: As of today, February 27, 2026, $WBD is trading around $28.28. By selling the $22 strike, you get a 22% margin of safety below the current market price and a 29% discount to the $31 buyout price.
The Ticking Fee Bonus: The Paramount deal includes a ticking fee of $0.25 per quarter if the deal drags past September. This creates an environment where Time (Theta) is literally being paid for by the acquirer. We are simply capturing our own version of that yield.
Why We Win
Scenario A: The Merger Closes. The deal is slated to close between September and December 2026. If it closes at $31, our $22 puts expire worthless. We keep the premium.
Scenario B: The Theta Bleed. We have 294 days of runway. As the regulatory hurdles are cleared one by one, the deal certainty increases and the implied volatility (IV) will collapse. We likely buy these puts back for $0.10 in the summer and walk away with a 75% profit on the trade without ever waiting for December.
Scenario C: The Superior Ownership. If the deal somehow breaks and the stock craters to $21.60 (our break-even), we are forced to buy shares of a company that just collected a $7 billion breakup fee and has a $91 billion asset base. That is a generational entry point.
The Bottom Line
We’ve got 10 months for the arbitrage to narrow. I’ll take the premium from the people betting on a collapse that the Ellisons literally cannot afford to let happen.