The shares of Dendreon Corporation (NASDAQ:DNDN - 5.42) have added more than 20% so far in September, and finished yesterday atop their 50-day moving average for the first time since early May. What's more, it appears a slew of options traders are gambling on an extended rebound for DNDN, as evidenced by yesterday's appetite for near-term calls.

By the time the dust settled, the biotech firm had seen around 12,000 contracts change hands -- nearly three times its average daily call volume, and more than six times the number of DNDN puts exchanged. Attracting notable attention was the near-the-money October 5.50 call, which saw 2,650 contracts traded. Nearly all of the volume translated into new open interest, and more than three-fourths of the calls crossed at the ask price, pointing to buy-to-open activity.

By purchasing the calls to open, the investors are betting on DNDN to continue its upward momentum over the next few weeks. Specifically, the volume-weighted average price of the calls was $0.38, meaning the buyers will reap a reward if DNDN topples the $5.88 level (strike plus premium paid) by October options expiration.

Yesterday's affinity for long calls merely echoes the recent trend. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock sports a 10-day call/put volume ratio of 13.64, indicating that traders have bought to open more than 13 DNDN calls for every put during the past two weeks. What's more, this ratio ranks in the 92nd annual percentile, suggesting option buyers are scooping up calls over puts at a near annual-high clip.

However, aside from the options pits, bullish bets are relatively rare for DNDN these days. Short interest edged 3.5% higher during the past month, and now accounts for nearly 29% of the stock's total available float. In fact, at the security's average daily trading volume, it would take roughly 12 sessions to repurchase all of these pessimistic positions.

Meanwhile, not one of the 18 analysts following DNDN considers it worthy of a "buy" or better rating. In the same vein, the consensus 12-month price target on the equity stands at $6.43, representing a premium of 18.6% to DNDN's closing price of $5.42 on Wednesday.

As alluded to earlier, the shares of DNDN toppled their 50-day moving average yesterday. However, the stock may not be out of the woods, from a longer-term perspective. Since peaking north of $17 in February, DNDN has stair-stepped lower, touching a three-year nadir of $4.17 in early August. Plus, the shares are still staring up at potential resistance in the $6 region -- which served as support before DNDN's bearish gap in late July, and is now home to the equity's 80-day trendline, which halted the stock's rebound attempts earlier this year.

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