Update: Currently trading in the high $16 price range.
Dendreon today saw massive volume - 30 million shares traded. The word on the street is that there is a massive short squeeze on the stock based on two recent developments;
1) The former CEO who had questionable insider selling transactions and over inflated future sales forecasts has now been replaced with a CEO that is known for flipping smaller companies to larger established ones at much higher prices and;
2) Amgen, who ironically has been discussed as a potential acquirer of Dendreon, had federal health regulators issue a negative review of their own prostate cancer drug. Thus increasing the likelyhood of acquiring a smaller company.
Shares of Dendreon soared 16% today.
What's the trade on this?
Stay away until Dendreon's earnings report at the end of February. If the earnings and guidance are better than forecasts - then there's a better than 50% chance Dendreon is sold in less than 12 months.
One way to play this is with options - purchase the March 20's calls today at around $1 a contract - this way you're exposure is limited.
If the earnings reported are good - these options could be worth triple. If the earnings are bad you've lost only a dollar. Otherwise if you purchase the stock, you could lose as much as 50% - the stock is that volatile.
Oh and one more last thing: If the options go from a $1 to $2 before earnings - take the money and run. Never be greedy - and don't be afraid to take profits...
Symbol for Dendreon is DNDN http://finance.yahoo.com/q?s=DNDN
Happy Trading...
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