Harvesting Implied Volatility On An AI Stock

Harvesting IV, in the Wild: Credo Technology Group (CRDO)

We put this one on last month when Credo Technology Group (CRDO -0.70%↓) appeared on our Top Names list. If you’re new here, Credo builds high-speed connectivity for data centers—SerDes chips and Active Electrical Cables (AECs) that move 100G/400G/800G traffic inside AI-era networks. It’s a straightforward way to play the AI infrastructure build-out.

Earnings: Yesterday, CRDO beat on both the top and bottom line and guided well; shares ripped after hours (trading >$140). That’s exactly the backdrop our “harvest IV” playbook is designed for.

The setup 

We opened a financed call spread in CRDO with:

• A Jan ’26 call spread (long $135 / short $155), and

• A Sep ’25 bull put spread (short $110 / long $105) to offset call cost.

Our entry filled at a net debit of $2.97 per spread.

Why this exemplifies “harvesting IV”

When we opened the trade, implied volatility (IV) in the near-dated puts was rich. Selling that put spread helped finance the call spread. Now, after the earnings surge, the intrinsic + IV crush lets us buy back that short put spread cheaply.

• We have a GTC buy-to-close at $0.20 on the Sep put spread. If it fills this month (as we expect after last night), here’s how the risk/reward shifts:

Before buying back the put spread

• Max upside (if CRDO ≥ $155 by Jan ’26):
  Width of call spread ($20) − entry debit ($2.97) = $17.03 ⇒ $1,703 per contract.

• Max loss (tail risk while the Sep puts are alive):
  Entry debit ($2.97) + max loss of $110/$105 put spread ($5) = $7.97 ⇒ $797 per contract (broker rounded ~$810).

After we buy back the put spread at $0.20

• Your remaining position is just the Jan ’26 $135/$155 call spread with an effective basis of
  $2.97 (original net) + $0.20 (buyback) = $3.17.

• New max upside: $20 − $3.17 = $16.83 ⇒ $1,683 per contract.
  (Down just $20 from before—because we spent $0.20 to close the hedge.)

• New max loss: now only the call-spread basis $3.17 ⇒ $317 per contract.
  (That’s the “harvest”: we’ve stripped out ~$480 of downside exposure while keeping almost all of the upside.)

In plain English: We sold near-dated put premium when IV was fat, then bought it back for dimes after the catalyst. What’s left is a long-dated upside ticket into the AI networking cycle—with a much smaller capital at risk.

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