ON Butterfly Strategy
ON (ON Semiconductor Corporation), in the Technology sector, (Semiconductors industry), listed on NASDAQ.
ON Semiconductor Corporation operates as a global provider of sophisticated power and sensing solutions. Their cutting-edge power innovations are pivotal in modernizing various sectors: they contribute to the development of lighter, extended-range electric vehicles, underpin rapid-charging infrastructure, and bolster sustainable energy initiatives for applications such as solar arrays, industrial power systems, and energy storage. The company's operations are structured into three main divisions: the Power Solutions Group, the Advanced Solutions Group, and the Intelligent Sensing Group. ON Semiconductor offers a broad array of semiconductor products, including analog components, discrete devices, modules, and integrated circuits. These products are designed to perform numerous critical functions, such as power switching, energy conversion, signal conditioning, circuit protection, signal amplification, and voltage regulation. Beyond these standard offerings, the firm also designs and develops specialized analog, mixed-signal, advanced logic, application-specific integrated circuits (ASICs) and standard products, radio frequency (RF) components, and integrated power management solutions, catering to a diverse range of end-market consumers.
ON (ON Semiconductor Corporation) trades in the Technology sector, specifically Semiconductors, with a market capitalization of approximately $32.44B, a trailing P/E of 51.60, a beta of 2.02 versus the broader market, a 52-week range of 44.56-134.92, average daily share volume of 12.1M, a public-listing history dating back to 2000, approximately 23K full-time employees. These structural characteristics shape how ON stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 2.02 indicates ON has historically moved more than the broader market, amplifying both the directional payoff and the realized volatility relative to an index-equivalent position. The trailing P/E of 51.60 is on the rich side, which tends to correlate with higher earnings-window IV expansion as the market debates whether forward growth supports the multiple.
What is a butterfly on ON?
A long call butterfly buys one lower-strike call, sells two ATM calls, and buys one higher-strike call, paying a small net debit for a defined-risk position that maxes out if the underlying pins the middle strike at expiration.
ON snapshot
As of August 14, 2026, spot at $82.19, ATM IV 53.40%, IV rank 24.47%, expected move 15.31%. The butterfly on ON below is built from the August 14, 2026 end-of-day chain, with strikes snapped to listed contracts and premiums pulled from the bid/ask midpoint at a 28-day expiry.
Why this butterfly structure on ON specifically: ON IV at 53.40% is on the cheap side of its 1-year range, which favors premium-buying structures like a ON butterfly, with a market-implied 1-standard-deviation move of approximately 15.31% (roughly $12.58 on the underlying). The 28-day window matched to the front-month expiry keeps theta exposure bounded while still capturing the post-snapshot move; longer-dated ON expiries trade a higher absolute premium for lower per-day decay. Position sizing on ON should anchor to the underlying notional of $82.19 per share and to the trader's directional view on ON stock.
ON butterfly setup
The ON butterfly below is built from the August 14, 2026 end-of-day chain, with each option leg priced at the bid/ask midpoint of its listed strike. With ON at $82.19 on that close, the first option leg uses a $78.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed ON chain at a 28-day expiry; the cross-strike IV skew is reflected directly in the per-leg values rather than approximated. Quantity sizing assumes one contract per option leg (or 100 ON shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $78.00 | $7.30 |
| Sell 2 | Call | $82.00 | $5.00 |
| Buy 1 | Call | $86.00 | $3.53 |
ON butterfly risk and reward
- Net Premium / Debit
- -$82.50
- Max Profit (per contract)
- $295.70
- Max Loss (per contract)
- -$82.50
- Breakeven(s)
- $78.83, $85.18
- Risk / Reward Ratio
- 3.584
Max profit equals the wing width minus net debit times 100 (reached when the underlying pins the middle strike); max loss equals the net debit times 100. Two breakevens at lower-wing plus debit and upper-wing minus debit.
ON butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on ON. Each row is one sampled price point from the computed payoff curve; the full curve uses 200 price points internally before being summarized into 10 rows here.
| Underlying Price | % From Spot | P&L at Expiration |
|---|---|---|
| $0.01 | -100.0% | -$82.50 |
| $18.18 | -77.9% | -$82.50 |
| $36.35 | -55.8% | -$82.50 |
| $54.52 | -33.7% | -$82.50 |
| $72.70 | -11.6% | -$82.50 |
| $90.87 | +10.6% | -$82.50 |
| $109.04 | +32.7% | -$82.50 |
| $127.21 | +54.8% | -$82.50 |
| $145.38 | +76.9% | -$82.50 |
| $163.55 | +99.0% | -$82.50 |
When traders use butterfly on ON
Butterflies on ON are pinning bets - traders use them when they expect ON to settle near a specific level at expiration (often the prior close, a round number, or the max-pain strike) and want defined-risk exposure to that outcome.
ON thesis for this butterfly
The market-implied 1-standard-deviation range for ON extends from approximately $69.61 on the downside to $94.77 on the upside. A ON long call butterfly is a pinning play: it pays maximum at the middle strike if ON settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current ON IV rank near 24.47% sits in the lower third of its 1-year distribution, where IV often re-expands toward the mean; this favors premium-buying structures and disadvantages premium-selling structures on ON at 53.40%. As a Technology name, ON options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to ON-specific events.
ON butterfly positions are structurally neutral / pin (limited-risk, limited-reward); the modeled P&L assumes European-style exercise at expiration and ignores early assignment, transaction costs, dividends paid before expiry on the stock leg (when present), and the bid-ask spread on the listed chain. ON positions also carry Technology sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move ON alongside the broader basket even when ON-specific fundamentals are unchanged. Always rebuild the position from current ON chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on ON?
- A butterfly on ON is the butterfly strategy applied to ON (stock). The strategy is structurally neutral / pin (limited-risk, limited-reward): A long call butterfly buys one lower-strike call, sells two ATM calls, and buys one higher-strike call, paying a small net debit for a defined-risk position that maxes out if the underlying pins the middle strike at expiration. With ON stock at $82.19 on the August 14, 2026 close, the strikes shown on this page are snapped to the nearest listed ON chain strike and the premiums come straight from that session's bid/ask midpoint.
- How are ON butterfly max profit and max loss calculated?
- Max profit equals the wing width minus net debit times 100 (reached when the underlying pins the middle strike); max loss equals the net debit times 100. Two breakevens at lower-wing plus debit and upper-wing minus debit. For the ON butterfly priced from the August 14, 2026 end-of-day chain at a 30-day expiry (ATM IV 53.40%), the computed maximum profit is $295.70 per contract and the computed maximum loss is -$82.50 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a ON butterfly?
- The breakeven for the ON butterfly priced on this page is roughly $78.83 and $85.18 at expiration, derived from the August 14, 2026 end-of-day chain's premiums. Breakeven is the underlying price at which the strategy's P&L crosses zero ignoring transaction costs and assignment risk. The ON market-implied 1-standard-deviation expected move in the same options snapshot is approximately 15.31%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on ON?
- Butterflies on ON are pinning bets - traders use them when they expect ON to settle near a specific level at expiration (often the prior close, a round number, or the max-pain strike) and want defined-risk exposure to that outcome.
- How does current ON implied volatility affect this butterfly?
- ON ATM IV is at 53.40% with IV rank near 24.47%, which is on the low end of its 1-year range. Premium-buying structures (long call, long put, debit spreads) are relatively cheap in this regime; premium-selling structures collect less credit per unit risk.