On Holding Plunges 7.76%—Is This the Start of a Sector-Wide Correction?

Summary
• On Holding (ONON) slumps to $44.45, a 7.76% drop from its 52-week high of $64.05
• Jefferies downgrades ONON to 'Sell' with $40.00 price target amid slowing growth
• Q2 revenue beats expectations but statutory loss shocks analysts
• Options chain shows heightened volatility with 20 contracts trading above 50% implied volatility

On Holding AG (ONON) has plunged to its lowest level since May 2024, trading at $44.45 as of 5:35 PM EDT. The stock’s sharp decline follows a downgrade from Jefferies and a surprise Q2 loss, despite revenue outperforming forecasts. With the Footwear & Accessories sector mixed, investors are scrambling to assess whether this selloff signals a broader industry correction or a stock-specific crisis.

Jefferies Downgrade and Q2 Loss Spark Panic
The immediate catalyst for ONON’s 7.76% drop was a Jefferies downgrade to 'Sell' with a $40.00 price target, citing slowing growth and rising competition from Nike. Compounding the issue, the company reported a statutory loss of CHF0.12 per share in Q2, despite revenue beating estimates by 6.4%. Analysts now project 2025 EPS to fall 17% to CHF0.49, reflecting reduced confidence in management’s ability to navigate margin pressures. The downgrade and earnings miss triggered a liquidity crunch, with the stock trading below its 200-day moving average of $52.18 and RSI at 44.43, signaling oversold conditions.

Footwear & Accessories Sector Mixed as ONON Lags
The Footwear & Accessories sector, represented by the S&P 500, has a 1-year return of 9.16% versus ONON’s 9.31%, indicating the stock’s underperformance is not sector-wide. However, peers like Nike (NKE) and Deckers (DECK) also face headwinds, with NKE down 1.12% and DECK down 3.31%. ONON’s 7.76% drop is the sharpest in the sector, reflecting its high valuation (701x PE) and exposure to global supply chain risks, including 40% tariffs on Vietnam imports.

Options and ETF Plays for Volatility-Driven Recovery
• 200-day MA: $52.18 (below current price)
• RSI: 44.43 (oversold)
• MACD: -1.52 (bearish), Signal: -1.53, Histogram: 0.01 (neutral)
• Bollinger Bands: $44.03 (lower band) vs. $44.45 (current price)

ONON’s technicals suggest a potential bounce from the lower Bollinger Band, but the high PE ratio and sector headwinds warrant caution. For short-term volatility, consider the ONON20250822P42 put option (strike $42, expiration 8/22) with 40.27% implied volatility and 152.84% leverage ratio. This contract offers high leverage if the stock breaks below $42, with a projected payoff of $0.45 per share in a 5% downside scenario. Alternatively, the ONON20250822C45.5 call (strike $45.50) has 37.69% IV and 75.13% leverage, ideal for a rebound above $45.50. Aggressive bulls may consider ONON20250822C45.5 into a bounce above $45.50.

Backtest On Holding Stock Performance
The 3-Day win rate for ONON after an intraday plunge of -8% is 54.17%, the 10-Day win rate is 55.42%, and the 30-Day win rate is 56.25%. The maximum return during the backtest period was 6.80% over 30 days, indicating that ONON has a higher probability of positive returns in the short term following a significant downturn.

ONON at Pivotal Crossroads—Act on Key Levels
ONON’s 7.76% drop has created a critical inflection point. While the stock’s oversold RSI and proximity to the lower Bollinger Band suggest a short-term rebound, the sector’s high valuation and global supply chain risks remain headwinds. Watch for a breakdown below $44.03 or a recovery above $47.37 (intraday high). For context, sector leader Nike (NKE) is down 1.12%, signaling broader industry pressures. Investors should prioritize options with high leverage and liquidity, such as ONON20250822P42, while monitoring the 200-day MA at $52.18 as a long-term benchmark.