Options Traders Love Dow Chemical

Dow Chemical faces daunting legal and business challenges but is nonetheless raising bullish speculation among options traders.

The March 7.50 calls were bought in heavy volume as DOW shares traded around $7.65 yesterday, according to OptionMonster's tracking systems. About 10,500 calls changes hands at that strike, against open interest of just 3,350 contracts.

Despite this bullish activity, the company must still address significant problems that have taken its shares to their lowest levels in over 20 years. DOW is fighting a suit from Rohm & Hass for failure to close on their $15.3 billion merger, and Petrochemical Industries of Kuwait has backed out of a joint venture agreement.

The company, which operates 150 manufacturing sites in 35 countries and produces some 3,300 products, hovered above its 52-week low of $7.20 for much of the day and closed at $7.45. The stock gained back $0.07 in after-hours trading. In Friday midmorning trade, DOW lost 10 cents, at $7.35.


Jon 'DRJ' Najarian is a professional investor, CNBC contributor, and cofounder of OptionMonster.com.