Credo Technology Plunges 10.56% Amid Semiconductor Sector Turbulence: What's Driving the Selloff?

Summary
• Credo Technology (CRDO) slumps 10.56% to $106.20, hitting an intraday low of $104.79 amid sector-wide volatility.
• India’s aggressive semiconductor push and Trump’s looming tariffs dominate headlines, creating a bifurcated market.
• Options activity surges, with 4.5 million shares traded as traders brace for volatility.

The semiconductor sector is in a tailspin as global trade tensions and domestic policy shifts collide. Credo Technology’s sharp intraday drop reflects broader uncertainty, with India’s chip-making ambitions and U.S. tariff threats creating a volatile backdrop. The stock’s 10.6% decline—its worst in months—highlights the sector’s sensitivity to macroeconomic and geopolitical shifts.

Tariff Fears and Sector Diversification Pressures Weigh on CRDO
Credo Technology’s 10.56% intraday plunge is driven by a confluence of factors: Trump’s announced tariffs on semiconductor imports, India’s aggressive domestic chip production plans, and sector-wide profit-taking. The U.S. market’s mixed performance—Dow hitting a record high while Nasdaq and S&P 500 slip—exacerbates uncertainty. CRDO’s sharp decline aligns with broader semiconductor sector jitters, as companies like TSMC warn of weaker Q3 demand due to front-loaded client orders. Additionally, India’s focus on mature-node manufacturing and strategic partnerships (e.g., Tata-Merck) signals a shift in global supply chains, pressuring firms reliant on traditional export models.

Semiconductor Sector Splits as Intel Surges 6.7%
While Credo Technology tumbles, Intel (INTC) defies the trend with a 6.7% intraday gain, signaling divergent investor sentiment. Intel’s rally reflects optimism around its 3.0 strategy and foundry ambitions, contrasting CRDO’s struggles. The sector’s bifurcation underscores a broader theme: firms with strong domestic partnerships (e.g., India’s DLI scheme beneficiaries) or U.S. manufacturing ties (e.g., Intel) are outperforming peers. This divergence highlights the sector’s fragmentation amid trade policy shifts and capital expenditure reallocations.

Options and ETFs for Navigating Semiconductor Volatility
• MACD: 6.74 (below signal line 7.26), bearish crossover confirmed
• RSI: 58.35 (neutral, no overbought/oversold signals)
• Bollinger Bands: Price at $106.20 (near lower band $95.09), indicating oversold conditions
• 200D MA: $66.94 (far below current price), suggesting long-term bullish trend intact

CRDO’s technicals present a high-risk, high-reward setup. The stock is testing key support levels near $104.79 (intraday low) and $98.12 (30D support). A break below $104.79 could trigger a test of the 52W low ($24.08), while a rebound above $116.29 (intraday high) may rekindle bullish momentum. Given the sector’s volatility, options with high leverage and liquidity are preferable to ETFs (none available).

Top Options Picks:
• CRDO20250919P105 (Put):
- Strike: $105, Expiry: 2025-09-19
- IV: 104.45% (elevated, reflecting high volatility)
- Delta: -0.420 (moderate sensitivity to price moves)
- Theta: -0.123 (moderate time decay)
- Gamma: 0.0119 (responsive to price swings)
- Turnover: 611,973 (high liquidity)
- LVR: 8.70% (moderate leverage)
- Payoff at 5% downside (ST = $100.90): $4.10 per contract
- Why: High IV and gamma make this put ideal for capitalizing on a sharp decline, with liquidity to enter/exit.

• CRDO20250919C110 (Call):
- Strike: $110, Expiry: 2025-09-19
- IV: 98.89% (reasonable volatility)
- Delta: 0.515 (moderate directional exposure)
- Theta: -0.253 (aggressive time decay)
- Gamma: 0.0128 (high sensitivity to price swings)
- Turnover: 423,032 (strong liquidity)
- LVR: 9.74% (moderate leverage)
- Payoff at 5% downside (ST = $100.90): $0 (out of the money)
- Why: While risky, this call offers asymmetric upside if CRDO rebounds above $110, leveraging high gamma and liquidity.

Action: Aggressive bears should prioritize CRDO20250919P105 for a 5% downside scenario. Bulls may consider CRDO20250919C110 as a speculative play if CRDO breaks above $116.29.

Backtest Credo Technology Stock Performance
The iShares Core MSCI All World ex USA ETF (CRDO) has historically shown resilience following a significant intraday plunge of at least -11%. Backtesting reveals a 3-day win rate of 52.11%, a 10-day win rate of 55.58%, and a 30-day win rate of 61.04%, indicating a higher probability of positive returns in the short term. The maximum return observed was 22.96% over 30 days, suggesting that CRDO tends to recover and even exceed its pre-plunge levels in the following weeks.

Semiconductor Sector at Inflection Point: Position for Volatility
Credo Technology’s 10.56% drop underscores the semiconductor sector’s vulnerability to trade policy shifts and domestic manufacturing competition. While India’s chip ambitions and Trump’s tariffs create near-term headwinds, CRDO’s long-term bullish trend (30D MA at $107.45) remains intact. Investors should monitor key levels: a break below $104.79 could trigger a deeper selloff, while a rebound above $116.29 may attract buyers. Intel’s 6.7% surge highlights the sector’s bifurcation—position accordingly. Watch for $104.79 breakdown or India’s next policy update.