Under Armour’s stock fell over 18% since August, nearing its all-time lows. However, a recent 8.59% surge occurred after Prem Watsa, a Canadian investor, acquired 15.6 million shares, suggesting a potential short-term breakout.
The stock has risen above a declining trendline at $4.89, traced back to May 2020. For a confirmed breakout, it needs to surpass resistance levels at $5.15 and $5.51, requiring sustained buying pressure and possibly a short squeeze. A separate declining trendline from December 2024 intersects these resistance points, presenting additional challenges.
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That massive share purchase in Under Armour is a clear signal that something has changed. After sliding for much of 2025 and nearing its historic lows, this big-money bet suggests we may have found a floor. We see this as a potential turning point after a prolonged period of doubt in the market.
This technical break above the long-term $4.89 trendline is the trigger for our attention. We are looking at out-of-the-money call options, possibly with February 2026 expirations, to play for a continued move. This strategy offers leveraged upside if the momentum continues, while clearly defining our risk to the premium paid.
The potential for a sharp move higher is amplified by the stock’s current short interest. With recent data showing over 15% of the public float sold short, any sustained push above resistance could trigger a short squeeze. This is precisely the kind of fuel needed to get through the tough $5.15 and $5.51 levels.
We have to remember that this comes after a difficult year, which we saw reflected in the mixed third-quarter earnings report back in November 2025. While international sales showed some promise, the persistent weakness in North America has kept many investors away. This context of low expectations is what makes the recent institutional buying so significant.
We must be mindful that the 8.6% surge has likely pushed up implied volatility, making options more expensive. A failure to hold above the $4.89 breakout level would negate this bullish thesis quickly. Therefore, traders should consider strategies like call spreads to reduce the entry cost and manage the risk of a false breakout.
