The 22 year-old has enjoyed an outstanding season so far with Gremio and feels ready to prove himself with his parent club.
Atletico have a break clause in Caio's loan deal to bring him back to Spain earlier than scheduled.
The winger is part of Brazil's Olympics squad and his form has attracted interest from across Europe. But Atletico see him as part of their future plans.
Caio has a deal to 2023 and which carries a buyout clause of €30m.