ON Holding Into Earnings
Shares of ON Holding (ONON) are down 17% recently and sit over 28% below their highs. The whole athletic apparel group has struggled. Tariffs hit this area hard, competition is tough, and fashion tastes shift, so names rise and fall over time. ON was one of the high-growth stars out of the gate, and this year has flipped.
Earnings come out next Tuesday before the market opens, next week.
The Chart
Recent price action has gone sideways. A low around the earnings event lined up closely with the old 52-week lows. That creates a double-bottom support near the 32 level. A second double bottom sits closer to the current price at 34.67. There is a relative low at 36.20, and a repeated ceiling near 39 and again just below 40. These horizontal levels are the ones to watch.
The pattern looks triangular: a gently sloping down trend line across the lows and a steeper, shorter-term uptrend rising into it.
The three fastest moving averages (one week, one month, one quarter) are clustered near 37.50. When moving averages bunch this tight, it means one of two things: sideways drift with low volatility, or wild swings so fast the averages find no direction. Here it clearly reads as the rangebound, sideways grind heading into earnings.
That gives a clean confluence point around 37.50, which also matches the trend line. It works as support, or, for a bearish view, as a breakdown point. Once price slips through, it can trigger a cascade of sell orders and a big push down.
The 251-day EMA, the longest-term average, comes in near 40.90. RSI is trending up, just a hair above the 50 midline, a slightly bullish read into earnings.
Volume Profile
The volume profile shows where trading happened, while a volume study shows when it happened. The point of control, the heaviest traded price, sits at 36. Below 35, activity thins out sharply. There is a gap in trading between about 38.50 and 41. Past that void, two more nodes appear, one near 42.50 and one near 45.
The Trade
The August 21st monthly expiration is 14 days out, with an expected move of about plus or minus 12%. That range lines up around the old highs near 42 and roughly around the old lows.
The target here is September. The September 18th expiration lands near those lows, with an expected move of plus or minus 15.2%.
Given the rangebound setup, the play is bullish, aiming for a push above resistance. The example trade is simple: buy one September 18th 37.50 call for a 2.75 debit, 42 days out. Max loss is the 2.75 paid. Like all long calls, max profit is potentially unlimited. Break-even sits at 40.25, about 7.3% higher, while the expected move runs more than 15%, so break-even falls well inside that range.
This could be turned into a vertical spread by adding a short call at the edge of the expected-move range to cut the cost. But low-volatility setups often come right before a high-volatility breakout, so keeping the upside uncapped has value. The option is fairly cheap, which made a single long call the fitting choice over a spread. A calendar trade, with a short call at a shorter duration, was another option. Simple won out.
Defined risk matters going into earnings, especially in retail, where big post-report moves have been common over the last several quarters. ON has been one of them, mostly to the downside.
