11:45am (EST)

Dendreon (DNDN, $24.00, up $2.45) got another pop after a live report from the American Urological Association’s (AUA) Conference in Chicago earlier this morning. So much is riding on the this news and we should know something shortly after 2pm (EST).

The skepticism is still high on the data being presented by Dendreon on its lead drug, Provenge, as the last wave of bears stand between those who are bullish on the stock. With so much on the line, I thought I would give an update on our open trades. The is the 2nd leg of our Dendreon trade after hitting the April calls for over a 2,500% return. Some of you rolled those profits into these positions and they have done amazingly well.

May 25 calls (UKOEE, $3.75, up $1.75)

Entry Price: $1.25 (4/17/09)
Exit Price: (open)
Return: 200%

August 10 calls (UKOHB, $14.60, up $1.80)

Entry Price: $2.20 (4/13/09)
Exit Price: $14.60 (open)
Return: 700% (roughly)

As you can see, the August calls have returned mind-boggling numbers and it would be prudent to take some of these gains off the table. If you closed just half the trade, you walk away with no exposure to the news announcement and at least a 100% return on the May calls with the chance of participating in further gains.

I still think the stock heads way higher after the news but as an option trader, I always manage risk. It would be stupid not to take a little off the table because there is that chance where we get the “sell the news” reaction. Of course, this isn’t just any “sell the news” event. This drug could really change the way cancer is treated and it could be the tip of the iceburg that could send Dendreon’s shares soaring instead of sinking.

I mentioned some cheap out-of-the-money put options in the Weekly Wrap that will also protect you in case the news isn’t what we are looking for. The May 10 puts (OKOQB, $0.45, down $0.10) have traded over 7,000 contracts thus far and they offer really cheap insurance in case Dendreon gets cake on its face.

We have a little over two hours before the news is out and I expect the stock to get halted before Dendreon presents the data. Whatever happens, I wanted to protect you from the downside while at the same time explaining how to manage your risks.

Keep your fingers crossed…oh yeah, feel free to send me your thoughts over the next couple of hours. Tell me what you are thinking. I’ve got 2 hours before countdown and I’d really like to know your thoughts and what you are feeling. As options traders, this is why we do the homework, this is why we put in the long hours, and this is why we do the research. It’s our Superbowl and these are the days we live to play for.

Rick Rouse