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This may sound absolutely ridiculous, this may BE absolutely ridiculous, but what if you had a put and call option on the same stock. What made me think of this was Dendreon. When it comes time for the FDA's verdict on Provenge, I'm guessing Dendreon stock will go either way up or way down, but who knows whether or not it will be approved? Is this a crazy idea? Any better ideas on how to make money off this situation?
 

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someone else recently brought up dndn. I remember what happened when the fda first refused dndn approval. Pandemonium does not describe it.

so i looked at dndn options. I was searching for signs of short positions ... there are more than 10 million shares short on dndn ... and i observed the telltale corresponding option positions. Also i concluded there were no option strategies that were not already over-populated by both pros and amateurs.

as for your particular strategy, this is called a straddle. It's well known. How did you happen to think of it. If you invented this yourself you are, at your age, an amazing genius & i am being sincere, not patronizing.

however, on to the negative stuff. The fact is pro traders don't buy straddles. They are regarded as too expensive & least likely to provide a pop. All dndn straddles are now insanely expensive, for example. Pros avoid long straddles because stk must move by more than the combined cost of buying both the call & the put; and the probability of this happening is, in most cases, slim.

the inverse is to sell a straddle but this is for the opposite situation, where stk is dormant & never moves.

my takeaway from looking at dndn option tables last week is that large numbers of institutional players have shorted & bought calls to cover in the 40, 45 and even 50 range, while other institutionals had gone long at some point in time but bought puts in the 17.50 range.

my sense is that major positions have all been taken in the dndn play. Amateurs may continue to pile in, but the biggies are already crouched in the starter blocks. If anything, many will sell before that may 1st date and i wouldn't be surprised to see sh price drop.

also, may i suggest you look carefully at good reports about what it is, exactly, that this medicine provenge is all about. Which patients is it designed for. How large were the trial groups. How sick were the patients in the trial groups. How is the treatment to be administered. How will it sell, if finally approved. You'll see answers to these questions in a bunch of articles over on Seeking Alpha. These answers are not going to cheer you up.
 

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Seems to me that the only way an amateur investor can hope to make consistent profit in options is with covered call writing, and only doing it on larger cap, non-pharmaceutical/tech companies. These companies tend to gap up or down, which can cause some significant problems.

That said, don't look at options as a get rich quick scheme. Smarter people with better models, lower commissions, and faster connections to the exchange are looking at every single option you might be considering. You're probably just gambling.
 

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i would think all the major US stock data bases carry short information.

the figure i obtained was from finance dot yahoo dot com. On the dendreon quote page, click on "more key statistics."
 

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however, on to the negative stuff. The fact is pro traders don't buy straddles. They are regarded as too expensive & least likely to provide a pop. All dndn straddles are now insanely expensive, for example. Pros avoid long straddles because stk must move by more than the combined cost of buying both the call & the put; and the probability of this happening is, in most cases, slim.
While disappointing, this is not overly surprising. This was an idea I got when brainstorming "what if's" while I was bored in drivers ed. I find that with everything I post on here I end up learning much more than the answer to the question I ask. Thank you for that, I am learning alot.
 
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