by Steve Sarnoff
May 13, 2007 Happy Mother's Day And My New Appreciation For Airbags. This Week, A Prius Play. All of us at Options Hotline wish you and yours a happy and healthy Mother's Day. Like my father, I've developed a certain judgment based on experience, but I am more of a technical analyst. I use chart patterns and mathematics to reveal the underlying human behavior that drives price movement. I work to identify who has the edge and where the balance of power is likely to shift. Each week, I scan the universe of thousands of stocks looking to find options winners for you. When this week's research turned up Toyota, I had to smile. It looks to me like people are discovering the Prius is a great car. I recently counted five new ones in the 15-minute drive to my daughter's
soccer practice. They get 45 mpg, are comfortable to drive (even for a tall guy like me), and are safe. I can be a witness to that. A week ago, I was driving my wife's beloved Prius, waiting to make a left turn into our neighborhood, with our 16-year old son in the passenger seat, about one minute from home. It was just before 8 pm and I saw the green arrow. I started to go and, suddenly, there's a car flying right at us. Bang! It was a new Mercedes C230 running a red light at about 50 mph and hitting us practically head-on. I thought, "Is this it?" It was a surreal experience. Following a bit of a spin, we walked from the car -- glad to be alive. Here's to airbags.
On Friday, stocks rebounded after not much of a break, bolstered by a quiet report on producer prices. Short-term, bulls still have the edge, but they are making their record run up against what could be significant resistance. Fasten your seatbelts. When the downside break happens, it may be quite sudden. This week, I've found you a call play on the auto company quietly conquering the competition. So, without further ado, here is… This Week's Option Recommendation Buy the Toyota July $120 call, for $520 or less, good this week. Shares of Toyota Motor Corp. trade on the New York Stock Exchange under the symbol "TM". The symbol for this reco is "TM GD". Toyota closed Friday at $119.94. Its 52-week range is $94.52-$138.00. The $120-strike call closed $490 bid at $520 and is an "out-of-the-money" option, with its premium for time and volatility only. Your broker can give you more information on the innovative automobile company, but I'll tell you why I like a call recommendation here. Shares have set back to support and I suspect Toyota is understating its growth expectations. I see key short-term support at $116-$119.35. Belowthat, Toyota has support down to $100. I see first resistance at $122-$126 and second resistance at $130-$135.50. Conservative traders should look to sell some of their positions if shares make a quick move up toward $122. Speculative traders may want to look for a multiplier move, if shares rise into the $130s. If Toyota rises to $133.25, each $120 call will have $1,325 of intrinsic value. If my expectations go awry and Toyota is at or below $120 on the third Friday in July, your option will expire worthless. That is your risk. | 
