Credo Technology Surges 4.96% on Patent Settlement – What’s Next for the High-Speed Connectivity Innovator?

Summary
• Credo Technology (CRDO) settles patent dispute with Volex, ending a lawsuit that had hung over its operations.
• Stock jumps 4.96% to $121.14, hitting an intraday high of $121.3875 amid renewed investor optimism.
• Turnover spikes to 1.05 million shares, signaling heightened market participation in the post-settlement rally.

Credo Technology’s stock has surged nearly 5% following a landmark settlement with Volex, resolving a long-standing patent dispute. The resolution has alleviated legal uncertainties, sparking a sharp rebound in trading activity. With the stock trading near its 52-week high of $128.56, investors are weighing the implications of this development for the company’s AI-driven connectivity roadmap.

Patent Dispute Resolution Sparks CRDO Rally
Credo’s 4.96% intraday gain stems from a confidential settlement with Volex, which dismissed their active electrical cable patent litigation. This resolution removes a significant overhang, allowing the company to focus on its core mission of advancing high-speed connectivity solutions for AI and hyperscale networks. The dismissal of the lawsuit, coupled with the joint statement emphasizing an 'amicable resolution,' has restored investor confidence in Credo’s intellectual property and operational stability.

Communication Equipment Sector Gains Momentum as Credo Surpasses Sector Leader
The Communication Equipment sector, led by Cisco Systems (CSCO) with a 1.21% intraday gain, has seen renewed interest. Credo’s 4.96% rally outpaces the sector’s broader movement, reflecting its unique position in AI-driven connectivity. While CSCO’s modest gain suggests cautious optimism, CRDO’s sharp rebound underscores its potential to outperform as demand for high-speed data infrastructure accelerates.

Options Playbook: CRDO20250905C120 and CRDO20250905P120 Lead the Charge
• 200-day average: $68.71 (well below current price)
• RSI: 54.96 (neutral, suggesting potential for further upside)
• MACD: 3.47 (bullish divergence from signal line at 5.01)
• Bollinger Bands: Price at $121.14 near upper band ($125.49), indicating overbought conditions

CRDO’s technicals suggest a continuation of its bullish momentum. Key support lies at the 30D moving average ($109.69), while resistance is near the 52-week high of $128.56. The stock’s 4.96% rally has pushed it into overbought territory, but strong volume and a neutral RSI suggest the trend may persist. For leveraged exposure, consider XLK (Communication Services ETF) or XLK-linked options.

Top Option 1: CRDO20250905C120
• Type: Call
• Strike Price: $120
• Expiration: 2025-09-05
• IV: 132.39% (high volatility)
• Leverage Ratio: 10.36%
• Delta: 0.564 (moderate sensitivity)
• Theta: -0.7189 (rapid time decay)
• Gamma: 0.0141 (moderate price sensitivity)
• Turnover: 164,960 (high liquidity)
• Payoff at 5% Upside: $7.195 (max(0, 127.195 - 120))
This call option offers aggressive leverage for a continued rally, with high liquidity and a delta that balances risk and reward.

Top Option 2: CRDO20250905P120
• Type: Put
• Strike Price: $120
• Expiration: 2025-09-05
• IV: 132.12% (high volatility)
• Leverage Ratio: 11.69%
• Delta: -0.436 (moderate bearish exposure)
• Theta: -0.2516 (slow time decay)
• Gamma: 0.0142 (moderate price sensitivity)
• Turnover: 71,737 (high liquidity)
• Payoff at 5% Upside: $0 (max(0, 120 - 127.195))
While the put option is bearish, its high IV and liquidity make it a viable hedge against a potential pullback.

Aggressive bulls should consider CRDO20250905C120 into a break above $125.49.

Backtest Credo Technology Stock Performance
The 5% intraday surge in CRDO has historically led to positive short-to-medium-term gains. The backtest data shows that following such an event:1. Short-Term Gains: The 3-day win rate is 58.55%, with an average return of 1.56% over 3 days. This indicates a moderate probability of a positive reaction in the short term.2. Medium-Term Gains: The 10-day win rate is higher at 59.87%, with an average return of 4.74% over 10 days. This suggests that CRDO tends to continue its upward trend in the days following a 5% intraday surge.3. Long-Term Gains: The 30-day win rate is 63.16%, with an average return of 10.51% over 30 days. This indicates that CRDO has a strong tendency to deliver positive returns in the longer term after such a surge.4. Maximum Return: The maximum return observed following the 5% intraday surge is 20.23%, which occurred on day 59. This highlights the potential for substantial gains if held for an extended period.In conclusion, a 5% intraday surge in CRDO is a bullish signal with a high likelihood of positive returns over various short-to-medium-term horizons.

CRDO’s Legal Clarity and Technical Bullishness Signal Strategic Entry Points
Credo’s settlement with Volex has cleared a major hurdle, aligning with its mission to drive AI connectivity. Technically, the stock’s proximity to its 52-week high and bullish MACD suggest a continuation of the rally. Investors should monitor the 30D moving average ($109.69) as a critical support level. Meanwhile, the sector leader CSCO (up 1.21%) offers a benchmark for broader industry sentiment. Act now: Position in CRDO20250905C120 for a breakout above $125.49 or use CRDO20250905P120 as a hedge against volatility.