Barrick Gold Corporation (ABX), a company that is engaged in the production and sale of gold, as well as related activities, such as exploration and mine development across the world, is reporting earnings on Wednesday, July 27, after market close: (Source: TD Waterhouse)The company beat earnings estimates in 63% of time in the last eight quarters, underperforming or showing in-line results in 37% of time, and has seen substantial volatility in the market price of its stock over the last three months: The market participants expect the following numbers over the next few quarters, including the upcoming one: (Source: TD Waterhouse)Note the wide volatility of expected financial results.On the other hand, market data show that the August options are relatively cheap: (Source: TD Waterhouse)The monthly straddles (options with a strike price of $20.50) are worth around 10.2% of the current market price of the stock. Historically, the stock has been more volatile than that on a monthly basis over the last year: (Source: Google Finance. Calculations by author)As you can see, the stock has had a monthly standard deviation of 17.6% over the last 52 weeks, while the straddle expiring in a bit less than a month has an implied monthly volatility of around 16.3% (calculated based on 18 business days remaining until expiration), also including volatility from the earnings event this week. I therefore see signs of substantial undervaluation in these options.What do you think of this trade?