What Are Dendreon Options Saying Now?

Dendreon (DNDN-NASDAQ) has already been noted as a bust this morning by us and by everyone else.  Even the Sub-Saharan Africa nations have noticed it, and this 10-point drop in the stock may force many shareholders to move there.  This is what can happen when betting around the FDA and pending FDA decisions.

The open interest is so large between the May put and call options that we could easily see 100 million shares trade hands today.  The $17.50 straddle for a volatility trade would have cost you $12.90 for both sides, meaning the stock would theoretically need to drop to under $5.00 or rise to over $30.00 for that trade to have been in the money.

Out of the active contracts, there were more than 500,000 various contracts of open interest in the PUT options and more than 550,000 in the various CALL option contracts.  Most of these may offset each other for the options market makers, but this could make for close to a 100 million share day in this stock.  The short interest alone was more than 33 million shares last month.

In less than 30 minutes of post-open trading (including pre-market) this stock has already traded more than 30 million shares.

Jon C. Ogg
May 9, 2007

Jon Ogg can be reached at [email protected]; he does not own securities in any of the companies he covers.