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Dendreon faces range-bound strategy

One trader apparently thinks that Dendreon will have an uneventful New Year.

optionMONSTER's tracking systems detected the sale of about 6,900 contracts each in the January 7.50 puts for $0.94 and the January 10 calls for $0.41, resulting in a credit of $1.35. Volume was above open interest in both strikes.

Known as a short straddle , the trade reflects a belief that the pharmaceutical stock will grind sideways through expiration. If DNDN does stay between $7.50 and $10, the trader will get to keep the $1.35 credit. The gains will erode outside of that range and turn to losses below $6.15 and above $11.35. (See our Education section)

DNDN is down 6.83 percent to $7.78 in midday trading and has lost more than three-quarters of its value so far this year. The most recent drop occurred on Nov. 2, when it reported disturbingly weak demand for its flagship Provenge cancer drug.

Overall option volume in DNDN is almost 4 times greater than average so far today.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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