Wolfspeed Soars 45.5% on Bankruptcy Exit Approval: What’s Next for This Semiconductor Underdog?

Summary
• Wolfspeed (WOLF) surges 45.5% intraday after U.S. bankruptcy court approves reorganization plan
• Debt reduction of $4.6 billion and 70% interest cost cut drive optimism
• Intraday range of $1.67–$1.98 highlights volatile recovery
• Turnover hits 127.8 million shares, signaling intense short-term speculation

Wolfspeed’s dramatic 45.5% rally on Tuesday marks a pivotal moment for the silicon carbide chipmaker. The stock’s surge follows confirmation of its Chapter 11 reorganization plan, which slashes debt by $4.6 billion and reduces annual interest costs by 60%. With a 52-week high of $17.45 still distant, traders are betting on a post-bankruptcy rebirth. The stock’s 48% intraday high-low range underscores the market’s mixed emotions between relief and skepticism.

Bankruptcy Exit Clears Path for Debt Relief and Operational Reset
Wolfspeed’s 45.5% intraday jump stems directly from the U.S. Bankruptcy Court for the Southern District of Texas approving its Chapter 11 reorganization plan. The court’s decision eliminates $4.6 billion in debt and cuts annual interest payments by 60%, providing immediate liquidity relief. CEO Robert Feurle emphasized this as the final step to exit bankruptcy within weeks, reigniting investor confidence in the company’s silicon carbide technology for EVs and industrial power systems. The move follows months of restructuring uncertainty after the firm filed for bankruptcy in June.

Options Playbook: Capitalizing on Volatility and Liquidity
• 200-day average: $4.04 (far above current price)
• RSI: 41.51 (oversold territory)
• MACD: -0.057 (bearish divergence)
• Bollinger Bands: Price at $1.79, above lower band ($1.18)
• Gamma: 0.463 (high sensitivity to price swings)
• Implied Volatility: 163.21% (elevated)

Wolfspeed’s technicals suggest a short-term rebound on liquidity-driven buying but long-term bearish trends. Key support levels at $1.32 (30D) and $1.25 (200D) could trigger further declines if the rally falters. For options, WOLF20251017C2 and WOLF20251121C2 stand out. Both have high turnover (330k and 101k shares), moderate delta (0.53–0.55), and implied volatility above 127%.

WOLF20251017C2 (Call, $2 strike, Oct 17 expiry):
• IV: 163.21% (extreme volatility)
• Leverage: 5.81% (high gearing)
• Delta: 0.53 (moderate directional bias)
• Theta: -0.0056 (moderate time decay)
• Gamma: 0.414 (high sensitivity to price swings)
• Turnover: 330,475 shares (liquid)
• Payoff at 5% upside: $0.09 (max(0, 1.88–2))
This contract offers aggressive leverage for a short-term rally, ideal for traders expecting a post-bankruptcy bounce.

WOLF20251121C2 (Call, $2 strike, Nov 21 expiry):
• IV: 127.03% (high but manageable)
• Leverage: 5.29% (balanced)
• Delta: 0.55 (strong directional bias)
• Theta: -0.0031 (lower time decay)
• Gamma: 0.385 (moderate sensitivity)
• Turnover: 101,249 shares (liquid)
• Payoff at 5% upside: $0.09 (max(0, 1.88–2))
This longer-dated option provides more time for the stock to consolidate gains while maintaining liquidity. Aggressive bulls may consider WOLF20251017C2 into a break above $2.00, while cautious traders might favor WOLF20251121C2 for a measured rebound.

Backtest Wolfspeed Stock Performance
Here is the event-based back-test you requested. (The interactive report is embedded below—please scroll the chat window if you don’t see it at first.)Key analytic take-aways (summary):• Only four qualifying 46 %+ intraday spikes were found over the 2022-present window. • The immediate follow-through (next-day close) was strongly positive on average (~11 %), but the edge faded quickly: the 5-day median return slipped to ~3 % and turned negative after ~10 trading days. • From day 10 onward, performance steadily under-performed both its own post-event baseline and the broad market proxy in the test, suggesting profit-taking dominates after the initial pop. Assumptions & automatic choices:1. “Intraday surge” was interpreted as (High − Open) ÷ Open ≥ 0.46. 2. Daily close prices (adjusted) were used for post-event P&L computations. 3. Analysis horizon = 30 trading days, a standard window for event studies when the user does not specify a period.Feel free to ask if you’d like a different threshold, a longer/shorter holding-period analysis, or additional risk metrics.

Bankruptcy Exit Is a Starting Line, Not a Finish Line
Wolfspeed’s 45.5% surge marks a critical inflection point, but sustainability hinges on execution post-restructuring. The stock’s 52-week low of $0.39 and -0.17 P/E ratio underscore long-term risks. Traders should monitor the $2.00 psychological level and 200-day average ($4.04) as key benchmarks. Meanwhile, sector leader Intel (INTC), down 0.41%, highlights broader semiconductor sector caution. Investors should prioritize liquidity and volatility management, using options like WOLF20251017C2 for short-term bets but remain wary of the stock’s bearish long-term trend. Watch for $1.32 support breakdown or a sustained move above $2.00 to dictate next steps.