Sometime After Midnight (EST)

Dendreon (DNDN, $21.53, up $0.15) has been in a funk since the “big announcement” of its cancer drug, Provenge, hit the world. I was afraid of this happening but I have been warning you of this. Pure and simple, the euphoria has worn off since the news but the fact that it is holding $20 is a positive sign.

Many people are worried about the CEO, Mitch Gold, and others taking some profits after the stock soared. Look, the man has been working on a cancer cure since he was a kid and lost his mom to cancer. So after 40 years of school, work and dedication, the dude cashes and is super rich. So what, he deserves it. Good for him. An old slogan I always tell my friends is “What are you doing today to become a millionaire tomorrow?” Mitch Gold got it.

I got a slew of emails on Dendreon’s wild ride from $27 to $11, back to $24. The drop in two minutes was the biggest bunch of garbage I have ever witnessed and hopefully something gets done about it. However, the Nasdaq is trying to sweep it under the rug and it burns my skin as much as yours.

If you recall, I had the stock at $25 before the news and then a 50% pop would have easily gotten us into the $30’s. When the Nasdaq decided to let all the trades stand…I was stunned. I really was. Not only was I right on target with my analysis that took me two years to study and follow, I was expecting another huge return. The thing that Mr. Obama really needs to do is follow up on this one because, incredibly, the Nasdaq announced that its decision is not open to appeal. WTF? Excuse the French but my two years of research was ruined with that circus.

However, I was blogging my fingers off those two days and here is where we last left off with Dendreon at 11am exactly a week ago:

“Continue to hold the other half of these positions or close half of the half position you still have open. The May options still have two weeks before they expire and I really think Dendreon can get to $30. However, if we start to slip today we can cash out that other half position. Longer-term, the August options should allow us to profit dollar for dollar as long as the stock continues higher.”

Here is where we currently stand on Dendreon:

May 25 calls (UKOEE, $0.45, down $0.05)

Entry Price: $1.25 (4/17/09)
Exit Price: (open) closed half at $3.75 on (4/28/09), closed 1/4 at $2.50 on (4/29/09), 1/4 still open.

As you can see, these options have gotten destroyed. This is why I was ringing the register and why I was urging you to do so as well. The “implied volatility” was just too inflated and the 50% drop and bounce was just too much to overcome.

August 10 calls (UKOHB, $11.50, down $0.55)

Entry Price: $2.20 (4/13/09)
Exit Price: (open) sold half at $14.60 on (4/28/09)

We have a “loose” stop of $11 on the August call options but that isn’t too safe right now. You could lower it to $9 or sell more now.

Dendreon has a bright future ahead of it and it will shine again. We should get some more momentum in the shares down the road and sooner or later the shorts will have to cover. However, Dendreon could be setting up to raise capital to expand the business and cover costs so we could see some more pressure on the stock. Hang tight, Dendreon will be back.

As far as MasterCard (MA, $172.70, up $5.16):

May 190 calls (MALER, $2.20, up $0.20)

Entry Price: $1.70 (4/28/09)
Exit Price: sold half at $3.40 (4/28/09), other half at $5.00

I suggested closing half positions at $3.40 and the other half before the company reported earnings. MasterCard reached $188 last Thursday and the calls soared much higher than our initial exit points. Once again, this trade was over last Thursday as the stock did a yo-yo after the announcent on Friday. The stock went as low as $163 after opening at $175 before closing at $172. Another wicked move no one could have predicted…

Rick Rouse
Rick@OptionsMentoring.com