You could buy 100 shares of $ON right now for about $7,300. Or you could buy the $70 call LEAP expiring January 2028 for about $2,200. Leveraged exposure to 100 shares. ~70% less capital. Over 480 days of runway.
The trade:
Strike: $70
Expiration: January 21, 2028
Premium: ~$22 per contract
Breakeven: $92
If $ON hits $100, this LEAP returns ~36%
If $ON hits $120, this LEAP returns ~127%
If $ON hits $140, this LEAP returns ~218%
100 shares at $140 returns ~93%. The LEAP returns more than 2x that on a fraction of the capital.
Why I like the setup:
Stock is down about 46% from its June 3 high of $134.92 on automotive exposure, China cyclicality and a valuation reset, while the business kept growing. Q2 revenue was $1.60B, up 9%, and Q3 is guided to $1.65B to $1.75B with gross margin expanding to 40% to 42%.
The inventory correction is ending: distribution inventory fell to 10.1 weeks, fab utilization rose to 83%, and lead times stretched from 27 to 32 weeks.
AI data center is its fastest-growing business, expected to more than double in 2026, with management targeting another doubling in 2027 and a new Vcore socket win generating revenue by year end. onsemi says its power content per AI rack can go from about $15,000 today to roughly $115,000 as racks move to high-voltage architectures.
The $7B Synaptics acquisition closes mid-2027, inside this contract's window. 486 days of runway gives this trade time to work through short-term noise.
The max you can lose on a LEAP is the entire premium you paid. In this case, that's $2,200 per contract. LEAPs are leveraged and can lose value quickly if the stock drops or stays flat. Only size this so you're comfortable losing all of it.
Note: LEAPs are one tool inside a broader portfolio. Owning shares is always the primary use of capital. This is a selective add-on for high-conviction moments when conditions align.
The trade:
Strike: $70
Expiration: January 21, 2028
Premium: ~$22 per contract
Breakeven: $92
If $ON hits $100, this LEAP returns ~36%
If $ON hits $120, this LEAP returns ~127%
If $ON hits $140, this LEAP returns ~218%
100 shares at $140 returns ~93%. The LEAP returns more than 2x that on a fraction of the capital.
Why I like the setup:
Stock is down about 46% from its June 3 high of $134.92 on automotive exposure, China cyclicality and a valuation reset, while the business kept growing. Q2 revenue was $1.60B, up 9%, and Q3 is guided to $1.65B to $1.75B with gross margin expanding to 40% to 42%.
The inventory correction is ending: distribution inventory fell to 10.1 weeks, fab utilization rose to 83%, and lead times stretched from 27 to 32 weeks.
AI data center is its fastest-growing business, expected to more than double in 2026, with management targeting another doubling in 2027 and a new Vcore socket win generating revenue by year end. onsemi says its power content per AI rack can go from about $15,000 today to roughly $115,000 as racks move to high-voltage architectures.
The $7B Synaptics acquisition closes mid-2027, inside this contract's window. 486 days of runway gives this trade time to work through short-term noise.
The max you can lose on a LEAP is the entire premium you paid. In this case, that's $2,200 per contract. LEAPs are leveraged and can lose value quickly if the stock drops or stays flat. Only size this so you're comfortable losing all of it.
Note: LEAPs are one tool inside a broader portfolio. Owning shares is always the primary use of capital. This is a selective add-on for high-conviction moments when conditions align.
