Illumina, Inc. (ILMN), a company that offers sequencing and array-based solutions for genetic analysis, and whose products and services serve customers in a range of markets, enabling the adoption of genomic solutions in research and clinical settings, is reporting earnings on Tuesday, July 26, after market close: (Source: TD Waterhouse)The company beat earnings estimates in 75% of time in the last eight quarters, underperforming in 25% 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)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 $150.00) are worth around 8.8% 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 13.7% over the last 52 weeks, while the straddle expiring in a bit less than a month has an implied monthly volatility of around 13.1% (calculated based on 19 business days remaining until expiration), also including volatility from the earnings event this week. I therefore see signs of clear undervaluation in these options.What do you think of this trade?