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November 12, 2013  Tue 9:37 AM CT

DNDN: SEE CHART GET CHAIN FIND STRATEGIES
Dendreon is trying to rebound from a multi-year selloff, but major doubts remain.

optionMONSTER's Depth Charge monitoring system detected the purchase of some 10,000 January 2.50 puts, most of which priced for $0.48. Volume is almost triple previous open interest at the strike, indicating that new trades were initiated.

Puts lock in the price where shares can be sold in the drug maker, which has been falling steadily for more than two years. Investors use the contracts to hedge long positions or to speculate on a drop. (See our Education section)

DNDN is up 4 percent to $2.60 in morning trading but at one point was up as much as 9 percent. The gains come after management said it would cut costs amid declining sales for its key Provenge cancer drug. The product has been hampered by its high costs and uncertainty about reimbursements.

Total option volume is almost twice the daily average so far in the session, according to the Depth Charge. Puts outnumber calls by a bearish 5-to-1 ratio.
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So far, my articles have taken you through a logical progression of option theory and fundamental concepts of options. As of yet, I have not mentioned a single strategy and for a good reason! The actual application of a strategy should come AFTER you learn about the option product itself.

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