Which term encapsulates an exaggerated imitation for the purpose of ridicule?

The term that encapsulates an exaggerated imitation for the purpose of ridicule is "parody." A parody takes a well-known work, whether it's literature, art, or a performance, and imitates it in a way that exaggerates certain features or characteristics for comic effect or to critique the original work. This form of satire not only entertains but also often points out the pitfalls or absurdities of the subject being parodied, making it an effective tool for commentary.

The other options do not fit this definition. An oxymoron is a figure of speech that juxtaposes contradictory terms, hyperbole is an exaggerated statement used for emphasis or effect, and analogy is a comparison between two different things to highlight some form of similarity. None of these terms encompass the idea of ridicule and exaggeration inherent in a parody.