On Holding Plunges 5.03% Intraday—Is This the Start of a Deeper Correction?

Summary
• Raymond James downgrades ONON to Outperform amid FX and tariff headwinds
• Intraday price falls to $50.1, breaching Bollinger Bands lower bound
• Options chain shows 1800+ contracts traded at key strike levels

The Swiss sportswear stock is under pressure as macroeconomic headwinds and institutional selling collide. With a 5.03% drop from $53.21 to $50.535, ONON's intraday low of $50.1 signals heightened volatility. The downgrade from Raymond James and rising tariff concerns in the apparel sector have triggered a flight to safety, while options activity reveals strategic positioning ahead of the August 1 expiration cycle.

Raymond James Downgrade Sparks Flight to Safety
The immediate catalyst for ONON's selloff stems from Raymond James' downgrade to Outperform, citing near-term macroeconomic pressures including currency volatility and higher tariffs. This follows a broader trend in the apparel sector where rising production costs are squeezing margins. The downgrade directly contradicts the stock's long-term bull case, with analysts now emphasizing short-term risks over the company's innovative product pipeline. Institutional selling, including First National Bank of Hutchinson's 51% stake reduction, has amplified the move as traders reprice risk exposure.

Apparel Sector Mixed as Nike Gains 1.28%
While ONON plunges, Nike (NKE) trades higher by 1.28% on improved consumer sentiment post-Vietnam trade deal. This divergence highlights ONON's vulnerability to currency swings and tariff impacts, contrasting with Nike's diversified global manufacturing footprint. The sector's 52W high for ONON at $64.05 remains a distant target as peers navigate more stable supply chains.

Bearish Positioning and Technical Divergence Signal Tactical Opportunities
• MACD -0.1987 (negative divergence) suggests bearish momentum
• RSI 55.07 (neutral) shows no overbought/oversold extremes
• 200-day MA at $52.25 (above current price) signals bearish crossover
• Bollinger Bands pinning price near $51.29 lower bound

The technical setup favors short-term bearish plays as ONON breaks below key support levels. The most liquid options are the ONON20250801P48 (Put) and ONON20250801C53 (Call).

ONON20250801P48:
• Put contract, Strike $48, Expiry 2025-08-01
• IV 43.41% (moderate), Leverage 101.33%, Delta -0.219978, Theta -0.005011, Gamma 0.077551, Turnover $1,800
• High leverage and moderate delta position it to capitalize on continued downside
• Projected payoff: $2.53 (5% move to $47.99) = $2.53 profit

ONON20250801C53:
• Call contract, Strike $53, Expiry 2025-08-01
• IV 38.72% (reasonable), Leverage 93.82%, Delta 0.268584, Theta -0.103080, Gamma 0.096839, Turnover $59,665
• High gamma and turnover make it responsive to price swings
• Projected payoff: $0.00 (5% move to $47.99) = no profit

Aggressive bears should consider ONON20250801P48 into a breakdown below $50.535. For directional plays, short-dated puts with high gamma offer optimal risk/reward.

Backtest On Holding Stock Performance
The ONON stock has experienced a -5% intraday plunge on July 22, 2025. Following this event, the stock showed a mixed performance in the short term. Here are the backtest results for the 3-Day, 10-Day, and 30-Day periods after the intraday plunge:The data indicates that the stock had a higher win rate and positive returns in the longer-term (10-Day and 30-Day) compared to the shorter-term (3-Day). This suggests that while there was some volatility immediately following the intraday plunge, the stock was able to recover and even exceed its pre-plunge levels in the days and weeks that followed. Investors with a moderate risk tolerance and a medium-to-long investment horizon might consider these findings when assessing the potential impact of such events on their investment strategy.

Critical Support Levels and Sector Rotation Demand Immediate Attention
The selloff has exposed ONON's vulnerability to macroeconomic headwinds, with technical indicators and options activity confirming bearish momentum. While long-term fundamentals remain intact, the immediate risk is a test of the 52W low at $34.59. Investors should monitor the ONON20250801P48 put for liquidity and the ONON20250801C53 call for directional bias. With Nike (NKE) rising 1.28% as a sector leader, capital reallocation is accelerating. Watch for a breakdown below $50.53 or a reversal in options volatility to signal the next move.