On Semiconductor Plunges 6.57%—Can the Bearish Momentum Be Stopped Before Key Support?

Summary
• ON Semiconductor slumps 7.3% intraday to $55.25, testing 52-week low of $31.04
• Intraday range narrows to $54.54–$56.16, signaling bearish momentum
• Sector-wide chip stock struggles weigh on the Nasdaq as Texas Instruments (TXN) dips 0.55%

On Semiconductor’s sharp selloff has ignited urgent questions about its near-term trajectory. The stock’s collapse into the lower end of its 52-week range—amid sector-wide headwinds and muted investor confidence—raises critical concerns about whether this is a buying opportunity or a warning sign. With the chip sector grappling with regulatory scrutiny and earnings uncertainty, ON’s 7.3% plunge demands a closer look at both fundamental and technical catalysts.

Sector-Wide Headwinds Overshadow Schaeffler Collaboration
Despite a newly announced design win with Schaeffler’s EliteSiC-based traction inverter platform, ON Semiconductor’s shares cratered 7.3% intraday. The move mirrors broader semiconductor sector weakness, as Texas Instruments’ 0.55% decline and the Nasdaq’s struggle to shake off chip stock drag point to systemic pressures. While the Schaeffler partnership targets long-term EV electrification growth, near-term investor focus remains on earnings risks and regulatory headwinds. ON’s Q2 results, due in mid-August, face high expectations amid a $58.73 average analyst price target, but its 52-week low of $31.04 and negative dynamic PE (-11.87) suggest lingering skepticism.

Semiconductor Sector Mixed as ON Trails Behind
The semiconductor sector remains fragmented, with ON Semiconductor trailing key peers. While TSMC’s recent 61% profit surge and Nvidia’s China H20 chip resumption have buoyed broader tech optimism, ON’s -11.87x forward PE and 52-week low of $31.04 highlight its underperformance. Texas Instruments’ 0.55% dip underscores sector-wide caution, contrasting with TSMC’s AI-driven optimism. ON’s 52W range of $31.04–$80.08 shows a 48.3% retracement, but its 1.12% turnover rate and 1.43 beta suggest heightened volatility and sensitivity to macroeconomic shifts.

Aggressive Short-Term Plays Amid Volatility: ETFs and Options
• 200-day MA: $54.59 (near current price); RSI: 61.82 (neutral); MACD: 2.71 (bullish but weak)
• Bollinger Bands: 51.39–63.44 (current price near lower band)
• Gamma: 0.076–0.091 (high sensitivity to price swings)
• Theta: -0.103–-0.122 (accelerating time decay)
• Implied Volatility (IV): 41.67%–47.55% (moderate)

Top Options Picks:
• ON20250801C59 (Call, $59 strike, IV: 44.55%, Leverage: 116.08%, Delta: 0.2215, Theta: -0.1224, Gamma: 0.0763): High leverage and IV position this as a speculative long if ON rebounds above $59. Payoff (5% downside): $0.00 (break-even at $55.25).
• ON20250801C60 (Call, $60 strike, IV: 47.30%, Leverage: 150.59%, Delta: 0.1724, Theta: -0.1039, Gamma: 0.0617): Aggressive long play for a sharp rebound, but time decay risks are steep. Payoff (5% downside): $0.00 (break-even at $55.25).

ETF Angle: The GraniteShares 2x Long NOW Daily ETF (NOWL) at 8.2% gains offers sector exposure, but its 2x leverage amplifies risk in a volatile environment. For a bearish bias, consider shorting ON20250801P53 (IV: 53.20%, Delta: -0.2566) if the $53 support level fails. Action Alert: Watch for a break below $55.25 to trigger a short bias.

Backtest On Semiconductor Stock Performance
The strategy that experienced a 7% intraday plunge showed no return during the backtest period, with a CAGR of 0.00% and an excess return of -88.19%, significantly underperforming the benchmark return of 88.19%. This indicates that the strategy failed to recover from the significant downturn, resulting in no positive returns.

Act Now: Capitalize on Volatility Before Sector Rebalance
ON Semiconductor’s 7.3% plunge has brought its stock perilously close to its 52-week low of $31.04, testing critical support at $55.25. While the Schaeffler collaboration hints at long-term potential, near-term technicals and sector-wide headwinds—exemplified by Texas Instruments’ 0.55% slide—suggest continued volatility. Investors should monitor the 200-day MA at $54.59 and the 53.32–54.18 support cluster. For a bullish pivot, a break above $59 and sustained volume above 5 million could reignite momentum. Aggressive traders may consider ON20250801C59 for a rebound, but prudence is key given the stock’s 1.43 beta and negative earnings multiple. Act Now: Short the stock if $55.25 breaks; long if it holds and rallies above $59. Sector leader TSMC (TSM) fell -0.19% intraday, signaling broader semiconductor sector caution.