Options Trading News

March 25, 2013  Mon 12:02 PM CT

Biotech Dendreon keeps falling, but the bulls are still buying.

optionMONSTER's Heat Seeker tracking system detected the purchase of 3,500 August 6 calls for $0.44 and sale of an equal number of August 4 puts for the $0.46 bid price. Volume surpassed previous open interest at both strikes, indicating that a new combination trade was initiated.

The trader received a credit of $0.02, which will be the profit if DNDN remains between the two strikes. Above $6, they'll make money, while they'll face losses below $4 because they'll be forced to buy shares at that price. The strategy provides cheap upside exposure with a good chance of the whole position expiring worthless. See our Education Section for more on how to manage positions using options.

DNDN fell 2.86 percent to $4.75, its lowest level since December, and peaked over above $7 last month. The bullish trade pushed total option volume to almost twice the daily average in the company so far today.
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