ON Covered Call Strategy
ON (ON Semiconductor Corporation), in the Technology sector, (Semiconductors industry), listed on NASDAQ.
ON Semiconductor Corporation provides intelligent sensing and power solutions worldwide. Its intelligent power technologies enable the electrification of the automotive industry that allows for lighter and longer-range electric vehicles, empowers fast-charging systems, and propels sustainable energy for the solar strings, industrial power, and storage systems. The company operates through three segments the Power Solutions Group, the Advanced Solutions Group, and the Intelligent Sensing Group segments. It offers analog, discrete, module, and integrated semiconductor products that perform multiple application functions, including power switching and conversion, signal conditioning, circuit protection, signal amplification, and voltage regulation functions. The company also designs and develops analog, mixed-signal, advanced logic, application specific standard product and ASICs, radio frequency, and integrated power solutions for end-users in end-markets, as well as provides foundry and design services for government customers. In addition, it develops complementary metal oxide semiconductor image sensors, image signal processors, and single photon detectors, including silicon photomultipliers and single photon avalanche diode arrays, as well as actuator drivers for autofocus and image stabilization for a broad base of end-users in various end-markets.
ON (ON Semiconductor Corporation) trades in the Technology sector, specifically Semiconductors, with a market capitalization of approximately $45.35B, a trailing P/E of 79.49, a beta of 1.94 versus the broader market, a 52-week range of 40.62-115.99, average daily share volume of 9.4M, a public-listing history dating back to 2000, approximately 26K 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 1.94 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 79.49 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 covered call on ON?
A covered call pairs long stock with a short out-of-the-money call, collecting premium and capping upside above the short strike in exchange for income.
Current ON snapshot
As of May 15, 2026, spot at $113.87, ATM IV 66.67%, IV rank 79.20%, expected move 19.11%. The covered call on ON below is built from the same 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 covered call structure on ON specifically: ON IV at 66.67% is rich versus its 1-year range, which favors premium-selling structures like a ON covered call, with a market-implied 1-standard-deviation move of approximately 19.11% (roughly $21.77 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 $113.87 per share and to the trader's directional view on ON stock.
ON covered call setup
The ON covered call below is built from the end-of-day chain, with each option leg priced at the bid/ask midpoint of its listed strike. With ON near $113.87, the first option leg uses a $120.00 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 100 shares | Stock | $113.87 | long |
| Sell 1 | Call | $120.00 | $6.33 |
ON covered call risk and reward
- Net Premium / Debit
- -$10,754.50
- Max Profit (per contract)
- $1,245.50
- Max Loss (per contract)
- -$10,753.50
- Breakeven(s)
- $107.55
- Risk / Reward Ratio
- 0.116
Max profit equals short-strike minus cost basis plus premium times 100; max loss is cost basis minus premium (at zero). Breakeven is cost basis minus premium.
ON covered call payoff curve
Modeled P&L at expiration across a range of underlying prices for the covered call 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% | -$10,753.50 |
| $25.19 | -77.9% | -$8,235.88 |
| $50.36 | -55.8% | -$5,718.26 |
| $75.54 | -33.7% | -$3,200.65 |
| $100.71 | -11.6% | -$683.03 |
| $125.89 | +10.6% | +$1,245.50 |
| $151.07 | +32.7% | +$1,245.50 |
| $176.24 | +54.8% | +$1,245.50 |
| $201.42 | +76.9% | +$1,245.50 |
| $226.60 | +99.0% | +$1,245.50 |
When traders use covered call on ON
Covered calls on ON are an income strategy run on existing ON stock positions; traders typically sell calls at 25-35 delta with 30-45 days to expiration to balance premium against upside cap.
ON thesis for this covered call
The market-implied 1-standard-deviation range for ON extends from approximately $92.10 on the downside to $135.64 on the upside. A ON covered call collects premium on an existing long ON position, trading off upside above the short call strike for immediate income; the short strike selection should reflect the trader's view on whether ON will breach that level within the expiration window. Current ON IV rank near 79.20% sits in the upper third of its 1-year distribution, which historically reverts; this raises the bar for premium-buying structures and lowers it for premium-selling structures on ON at 66.67%. 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 covered call positions are structurally neutral to slightly bullish; 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. Short-premium structures like a covered call on ON carry tail risk when realized volatility exceeds the implied move; review historical ON earnings reactions and macro stress periods before sizing. Always rebuild the position from current ON chain quotes before placing a trade.
Frequently asked questions
- What is a covered call on ON?
- A covered call on ON is the covered call strategy applied to ON (stock). The strategy is structurally neutral to slightly bullish: A covered call pairs long stock with a short out-of-the-money call, collecting premium and capping upside above the short strike in exchange for income. With ON stock trading near $113.87, the strikes shown on this page are snapped to the nearest listed ON chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are ON covered call max profit and max loss calculated?
- Max profit equals short-strike minus cost basis plus premium times 100; max loss is cost basis minus premium (at zero). Breakeven is cost basis minus premium. For the ON covered call priced from the end-of-day chain at a 30-day expiry (ATM IV 66.67%), the computed maximum profit is $1,245.50 per contract and the computed maximum loss is -$10,753.50 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a ON covered call?
- The breakeven for the ON covered call priced on this page is roughly $107.55 at expiration, derived from end-of-day chain premiums. Breakeven is the underlying price at which the strategy's P&L crosses zero ignoring transaction costs and assignment risk. The current ON market-implied 1-standard-deviation expected move is approximately 19.11%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a covered call on ON?
- Covered calls on ON are an income strategy run on existing ON stock positions; traders typically sell calls at 25-35 delta with 30-45 days to expiration to balance premium against upside cap.
- How does current ON implied volatility affect this covered call?
- ON ATM IV is at 66.67% with IV rank near 79.20%, which is elevated relative to its 1-year range. Premium-selling structures (covered call, cash-secured put, iron condor) generally look more attractive when IV rank is high; premium-buying structures (long call, long put, debit spreads) are more expensive in that regime.