Options Trading News

November 12, 2013  Tue 9:37 AM CT

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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The art of trading

As I stated in last week's article, a break out or a break down needs to have a couple things happen before it is considered a confirmed break out or break down. The only problem is that in today's market where things move much more quicker than they did just a few years ago, two days could wind up being the majority of the expected movement, if not the whole movement.

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