Mike Khouw's The Dow Chemical Company (DOW) Trade

Mike Khouw said on CNBC's Options Action that The Dow Chemical Company (NYSE: DOW) looks like it might be oversold. He wants to profit on the fact that stock price is low and the options price is high.

His strategy is to sell the January 25 put for $2.65, and if DOW trades lower and you have to buy the stock, with the premium collected, you would be buying this stock below its 52-week high. If the stock stays at this level or it trades higher, you are going to collect 10.6% in premium.

The Dow Chemical Company (DOW) gained 4.41% today, and it closed at 25.59.