Yahoo Inc (YHOO) has had a rough time over the past year. They've disappointed the Street on earnings, and moved lower as Google's (GOOG) drop from $475 weighs on the internet sector. But there may be a golden opportunity in YHOO shares here:

When a stock stops falling after such a massive decline and moves into a consolidation period as YHOO is doing now, one thing is almost for certain -- it's going to move in one direction or the other in a BIG way.

So how do we play this? There are basically two options.

First, we could put a strangle or straddle options spread on YHOO here with the expectation that it will move big in either direction fairly soon. This "market neutral" approach is a great way to play stocks in consolidation patters and is likely a good approach for Ebay Inc (EBAY), Amazon.com Inc (AMZN) and other internet stocks at these levels.

Another way to play YHOO here is to buy with a tight stop that requires a new 52 week low. We've found that when stocks consolidate after a massive move, they tend to move quickly in the opposite direction of the old trend.  Either way, the key is to recognize when the consolidation is broken and to react accordingly.

Andy Swan is co-founder and head trader for DaytradeTeam.com.  To get all of Andy's day trading, swing trading, and options trading alerts in real time, subscribe to a one-week, all-inclusive trial membership to DaytradeTeam by clicking here.