On Tuesday, biotech company Dendreon (DNDN) reported positive data for the world’s first-ever cancer vaccine.

It was huge news for scientists, doctors, patients… and traders. Dendreon’s stock tripled in the first hour of trading. It ended the day up 130%. And that’s after a 50% surge across the previous six trading sessions in anticipation of positive news.

Dendreon shareholders are no strangers to that kind of volatility…

In 2007, the stock shot up more than 500% after an independent advisory panel recommended approval of the vaccine, called Provenge, based on early clinical trial results.

But just weeks later, the FDA popped Dendreon’s bubble. The agency rejected Provenge based on a lack of convincing data. Shares tumbled more than 80% from their peak. (And traders who followed our advice booked big gains from the volatility.)

After the rejection, Dendreon’s stock staggered along for more than two years, as the company conducted additional clinical trials. Then, in the past few months, trading activity spiked as investors anticipated the release of new data.

Based on our previous experience, I was inclined to bet on the short side. I thought Provenge had less than a 30% shot at success.

But I knew if the results were positive, Dendreon’s stock could triple. So I structured a trade to profit from the volatility, no matter which way the results went. My FDA Report readers put on a "long straddle," a kind of options trade.

The way we set it up, we made money if the stock plummeted and we made lots of money if the stock soared. The only way we were going to lose money is if nothing much happened at all – unlikely given Dendreon’s history.

I was dead wrong about Provenge. But after the positive results came out, our trade was up more than 100%. We closed half of the position and we’ll be riding the other half for more gains.

The good news for traders is that the Dendreon saga has another chapter that will unfold in the next two weeks… The company didn’t release the full results for Provenge on Tuesday. It simply announced the data were "positive." Dendreon will present the final details at the upcoming American Urological Association meeting in Chicago on April 28.

If the results are as strong as the company claims, Dendreon will rocket to about $20 (it’s currently trading around $17). But if the numbers are less than perfect, don’t be surprised if Dendreon sells off to $12 or less.

The options are pricey… and it’s almost impossible to predict which way the cards will fall. I’m definitely not saying you should buy the stock here. But if you’re a volatility junkie, you can get your fix from Dendreon on the 28th.

Good investing,

Dr. George Huang
Growth Stock Wire