Consolidations take place where the individual price spreads are tight on each bar or candlestick, representing that buyers and sellers are matching each other closely. This is itself is a sign of lower volatility in options trading. It is important for you as a trader to be familiar with these chart patterns because volatility has direct impact on options prices. Some of these price patterns are: Pennants, Triangles, and Wedges.

Pick options that have been consolidating for a while and are ready to explode to a direction (up or down) and by utilizing an easy to use (strangle and straddle) option strategy you can take advantage of the stocks breakout to make great profits.