Credo Technology Plummets 5.26% Amid Volatile Intraday Action – What’s Fueling the Selloff?

Summary
• CRDO opens at $146.00 but plummets to an intraday low of $133.12, a 9.5% drop from its opening price.
• The stock trades at $135.69, down 5.26% from its previous close of $143.22, with a 3.78% turnover rate.
• Technical indicators signal a bearish reversal, with RSI at 38.39 and MACD (-4.03) below its signal line (-3.42).

Credo Technology’s intraday collapse has ignited a frenzy of put option activity and raised questions about the sustainability of its recent rally. With the stock trading near its 52-week low of $29.09 and Bollinger Bands tightening, traders are scrambling to decipher whether this is a short-term correction or a deeper structural shift in the semiconductor equipment sector.

Bearish Momentum Intensifies as Technical Indicators Signal Deterioration
CRDO’s sharp intraday decline is driven by a confluence of bearish technical signals. The RSI (38.39) has entered oversold territory, while the MACD (-4.03) remains below its signal line (-3.42), confirming a weakening trend. Bollinger Bands show the stock is trading near the lower band ($124.17), a critical support level. The 200-day moving average ($109.21) is far below the current price, but the 30-day average ($154.76) has acted as a resistance, now breached. This breakdown suggests short-term sellers are gaining control, exacerbated by high implied volatility in the options market.

Semiconductor Equipment Sector Splits as AMAT Soars, CRDO Crumbles
While Credo Technology’s sector leader, Applied Materials (AMAT), is up 5.46% intraday, CRDO’s performance diverges sharply. This disconnect highlights sector-specific pressures or company-specific catalysts. AMAT’s gains may reflect broader optimism in semiconductor equipment demand, but CRDO’s underperformance suggests investor skepticism about its near-term execution or valuation. The sector’s mixed performance underscores the need for granular analysis of individual fundamentals.

Bearish Options and ETFs: Capitalizing on CRDO’s Volatility
• 200-day average: $109.21 (far below current price)
• RSI: 38.39 (oversold)
• MACD: -4.03 (bearish)
• Bollinger Bands: Lower band at $124.17 (critical support)

CRDO’s technicals point to a high-probability continuation of the bearish trend. Key levels to watch include the 200-day MA ($109.21) and the lower Bollinger Band ($124.17). Short-term traders should consider bearish options with high leverage and liquidity. The options chain reveals two standout contracts:

• CRDO20260109P125 (Put, $125 strike, 2026-01-09 expiry):
- IV: 100.56% (elevated)
- Leverage Ratio: 123.98% (high)
- Delta: -0.2107 (moderate sensitivity)
- Theta: -0.2057 (rapid time decay)
- Gamma: 0.0180 (moderate sensitivity to price moves)
- Turnover: 85,566 (liquid)
This put option offers aggressive leverage and high liquidity, ideal for capitalizing on a 5% downside move. A 5% drop to $128.90 would yield a payoff of $3.90 per contract.

• CRDO20260109P127 (Put, $127 strike, 2026-01-09 expiry):
- IV: 94.92% (elevated)
- Leverage Ratio: 71.78% (moderate)
- Delta: -0.2413 (moderate sensitivity)
- Theta: -0.1775 (rapid time decay)
- Gamma: 0.0206 (high sensitivity to price moves)
- Turnover: 39,078 (liquid)
This contract balances leverage and liquidity, with strong gamma to benefit from price swings. A 5% drop would yield a $5.89 payoff.

Aggressive bears should prioritize CRDO20260109P125 for its high leverage and liquidity. If the stock breaks below $124.17, this contract could deliver outsized returns.

Backtest Credo Technology Stock Performance
The iShares Core MSCI All World ex USA ETF (CRDO) has demonstrated resilience following a -5% intraday plunge from 2022 to the present. In the backtest period, CRDO was triggered 460 times, with a 3-day win rate of 51.74%, a 10-day win rate of 54.35%, and a 30-day win rate of 61.30%. The average 3-day return was 1.55%, the 10-day return was 3.39%, and the 30-day return was 11.98%. The maximum return during the backtest was 23.81%, achieved on day 59.

CRDO’s Bearish Breakdown: Immediate Action Required
Credo Technology’s intraday collapse signals a critical juncture for traders. The stock’s breakdown below key support levels and bearish technicals suggest further downside is likely. Investors should monitor the 200-day MA ($109.21) as a long-term floor and the $124.17 Bollinger Band support for near-term direction. With AMAT surging 5.46%, sector divergence adds urgency to CRDO’s bearish case. Aggressive short-side positioning via high-leverage puts like CRDO20260109P125 is warranted if the stock closes below $124.17.