Credo Technology Plummets 7.5% as Mixed Options Sentiment and Insider Sales Spark Volatility

Summary
• Credo Technology (CRDO) trades at $109.80, down 7.53% from its previous close of $118.74
• Unusual options activity shows 41% bullish and 41% bearish sentiment, with $1.766 million in call and put trades
• CEO and CFO sold shares totaling $5.33 million in the last three months

Credo Technology’s sharp intraday decline has ignited a frenzy of options trading and institutional scrutiny. With the stock trading near its 52-week low of $24.08 and a dynamic P/E ratio of 361.16, investors are grappling with conflicting signals from insider sales, mixed options activity, and a recent earnings beat. The stock’s 76.4% year-to-date gain now faces a critical test as volatility intensifies.

Mixed Options Sentiment and Insider Sales Drive CRDO's Sharp Decline
Credo Technology’s 7.53% intraday drop reflects a collision of bearish catalysts. Unusual options activity reveals 41% of traders betting against the stock, with bearish call sweeps at $65 and $175 strike prices. Meanwhile, insider selling by CEO William Brennan and CFO Daniel Fleming—totaling $5.33 million in shares—has amplified investor caution. Despite Q2 earnings beating estimates and 179.6% revenue growth, the stock’s 439.37 P/E ratio and 353.85% projected earnings growth remain under scrutiny. Analysts at Susquehanna and Mizuho maintain $115–$135 price targets, but the recent $350M trading volume surge suggests short-term profit-taking and hedging activity.

Options Playbook: Navigating CRDO's Volatility with Strategic Contracts
• 200-day average: $66.94 (far below current price)
• RSI: 58.35 (neutral-to-bullish)
• MACD: 6.74 (bullish divergence from signal line 7.26)
• Bollinger Bands: Upper $129.56, Middle $112.33, Lower $95.10 (price near lower band)

CRDO’s technicals suggest a volatile but structurally bullish setup. The stock is trading above its 30D MA ($107.45) but far below its 200D MA, indicating a potential rebound. Two options contracts stand out for directional plays:

• CRDO20250919P110 (Put, $110 strike, 9/19 expiry):
- IV: 99.48% (high volatility)
- Leverage: 8.65%
- Delta: -0.4378 (moderate bearish sensitivity)
- Theta: -0.1168 (moderate time decay)
- Gamma: 0.01218 (high sensitivity to price swings)
- Turnover: $242,786
- Payoff at 5% downside: $104.31 → $5.69 profit per contract
- Why it stands out: High IV and gamma make this put ideal for capitalizing on a short-term breakdown below $110.

• CRDO20250919C115 (Call, $115 strike, 9/19 expiry):
- IV: 98.49% (high volatility)
- Leverage: 10.17%
- Delta: 0.5011 (moderate bullish sensitivity)
- Theta: -0.2598 (aggressive time decay)
- Gamma: 0.01245 (high sensitivity to price swings)
- Turnover: $111,100
- Payoff at 5% downside: $104.31 → $0 (no profit)
- Why it stands out: High gamma and leverage make this call a speculative play if the stock rebounds above $115.

Trading Insight: Aggressive bears should prioritize CRDO20250919P110 for a short-term breakdown trade, while bulls may consider a limited-to-moderate long position above $115. Monitor options expiration on 9/19 for liquidity shifts.

Backtest Credo Technology Stock Performance
The iShares Core MSCI All World ex-US ETF (CRDO) has historically shown resilience following a -8% intraday plunge. The 3-day win rate is 52.58%, the 10-day win rate is 56.02%, and the 30-day win rate is 61.43%, indicating a higher probability of positive returns in the short term. The maximum return during the backtest period was 23.06%, which occurred on day 59, suggesting that CRDO can rebound significantly after a sharp decline.

Act Now: CRDO's Volatility Presents High-Risk, High-Reward Opportunities
Credo Technology’s 7.53% decline has created a pivotal inflection point. While the stock’s 361x P/E ratio and 353.85% projected earnings growth remain structurally bullish, the immediate outlook hinges on breaking key levels. The CRDO20250919P110 put offers a high-gamma, high-IV play for a breakdown below $110, while bulls should watch for a rebound above $115. With Cisco Systems (CSCO) up 0.25% as the sector leader, investors must balance CRDO’s technical resilience against insider sentiment and options-driven volatility. Action Alert: Prioritize the CRDO20250919P110 put for a short-term bearish trade and monitor the 9/19 options expiration for liquidity shifts.