I am very disappointed with Dendreon's stock price
I spoke with my broker who recommended Dendreon earlier this year. I bought it near $6 so am not happy about this price now. I am not an astute biotech company investor. I called him today to voice my displeasure. He told me that I shouldn't worry too much because he said that based on the August options it looks like the stock should go back up. He said that there is a lot of interest in the $7 call options and they are now very cheap for about 10 cents. He said the most interest in the put options are at $5 but they are very expensive at a buck fifty. He claims that we can expect to see the stock move up to at least $6 in the coming months. I know absolutely nothing about options. Can anyone knowlegeable about options verify any of this? What will happen by August to move the stock to these levels? I know some here are talking about a buy out or Provenge getting its approval in Europe. Does this have anything to do with it? TIA. Frustrated Dendreon stock owner.
Your broker may be right. The movements of stocks like Dendreon have a lot to do with put/call option strategies. The name of the game is to make as many put and call options expire worthless. Based on August put/call positions, it appears about $6.75 most of these highest open interest options will expire worthless. I believe these options are themost active due to pending European approval of Provenge with an ensuing parntership. I wouldn't be too concerned about a $6 cost. You should be able to get your money back and then some after Europe approves.
"What will happen by August to move the stock to these levels?"
By Aug, you will hear Europe CHMP/CAT (equivalent to US FDA Advisory Committee) recommendation whether to approve Provenge to market in Europe. Everyone is expecting it to be positive. Then, a formal approval should follow within 30 days.
This approval would enable Dendreon either to partner with a large EU pharmas, or license Provenge outright. The upfront payment would be used to retire/pay down debts (2016 Notes) and sustain/expand US operation and Rest-Of-the-World. By then, US revenues/sales should be improved as JJ's restructure would kick in full gear and drive down costs below 50%.
That's why August call option is very hot right now.
Thank you for the info. I was thinking of selling but my broker told me it would be foolish to sell. He said he has other clients in the stock at even higher prices than mine and they are not selling their stock. He also talked about the heavy short position weighing the stock down. He did say something about the short position also knowing what is going to happen and that they will start covering and driving the stock back up as the review in Europe gets closer. He said it is only a couple of months away and that they will not wait until the last minute to start covering. I decided to wait couple of months because I would feel like a fool if I sold here at a bottom and then the stock ends up going back up to $6 or $7. I noticed a lot of talk about a buy out. I am wondering if that might also happen here soon before the stock gets a chance to run up higher?