Macro Tsimmis

intelligently hedged investment

Dendreon options (UKOHA & UKOTA) straddle play update #3

Posted by intelledgement on Fri, 03 Apr 09

Dendreon (DNDN) shares shot up dramatically today—finishing +38% on 11x normal volume—for no particularly discernible reason. According to CNBC’s pharma guy, Mike Huckman, the buying may have been kicked off by a report that the American Urological Association has slotted the company for a “late breaker” presentation slot at their conference at the end of April, presumably to enable Dendreon to announce their phase 3 Provenge IMPACT study results.

Our straddle play depends on these results either establishing that Provenge provides a significant survival benefit for prostate cancer patients—in which case we should profit on our $5 Aug calls (UKOHA) as the stock will surge well north of $5—or failing to so establish any benefit—in which case our $5 Aug puts (UKOTA) will be worth more than we paid for them as the stock will sink to less than $1 in value.

At the close today, our calls were valued at $2.99, up 99% from the $1.50 we paid for them, while our puts closed at $2.90, off 12% from the $3.29 they cost us. Overall, we are up 30% in five weeks…so far, so good.

Previous DNDN-related posts:


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