Hallador Energy Company (HRNG) is an oil and gas exploration company focused on developing coal reserves in the Illinois Basin. The company, through its subsidiary, Sunrise Coal, LLC, is engaged in coal mining in the state of Indiana serving the electric power generation industry. Its projects include Carlisle Mine, Ace in the Hole Mine, Oaktown 1 Mine, Oaktown 2 Mine and Bulldog Mine. It develops over 10 million tons of coal annually and has customers in the mid-west and southeastern United States. It is reporting earnings on Friday, August 5, after market close: (Source: TD Waterhouse)As evident from the above, the company beat earnings estimates in 37% of time in the last eight quarters, underperforming in 63% of time,and has seen modest volatility in the market price of its stock over the last three months: $HNRG, Hallador Energy Company / 60 The market participants expect the following numbers over the next few quarters, including the upcoming one: (Source: TD Waterhouse)Market data show that the August options are relatively expensive: (Source: TD Waterhouse)The three-week straddles (options with a strike price of $5.00) are worth around 18.5% 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 16.2% over the last 52 weeks, while the straddle expiring in a bit less than three weeks has an implied volatility of around 11.8% (calculated based on 11 business days remaining until expiration), also including volatility from the earnings event this week. I therefore see signs of clear overvaluation in these options. Hence, selling the straddle is a good idea from the theoretical standpoint.What do you think of this trade?