Investing With Options header image ≡ Menu

Just Released: Get Your FREE Iron Condor Trading Toolkit

Click Here to Download

A Multi Month Base in On Semiconductor (ONNN)

I've been watching this stock since October, when no new lows were made with the rest of the market, and it may be ready for a breakout and a potential new trend higher.

Let's take a look at the chart.

Daily stock chart of ONNN

After the double top that was completed last year, $ONNN has been undergoing a multi-month base. It is coming to retest the top of this base right now at 8.40.

If this base breaks out, the measured move of the pattern puts the target at 10.50. That seems a bit ambitions initially as there is a key pivot level at 9.25 and then a gap fill just above $10/share.

We are seeing several patterns like this in the semiconductor space $SMH, and this area is definitely on watch going into earnings.

Option Trading Strategies

My favorite trade in $ONNN right now is a covered call. The Feb 8 Covered call is what I have been suggesting to IWO Premium members-- but the liquidity in the options is lacking.

Another idea would be to get into a synthetic covered call, where you purchase the July 6 call and sell the Feb 8 call against. This would require much less capital up front and offer about a 15% return on maximum risk.

by Steven Place

Steven Place is the founder and head trader at