Yahoo's (YHOO) stocks performed incredibly calmly yesterday after the earnings release:(Source: Google Finance)Nevertheless, the short-term (one-week) options are still overpriced, even though implied volatility should have decreased after the important information came out:(Source: optionistics.com)As you can see, there is a theoretical edge in this call option. On the other hand, the two-week calls are much less overpriced:(Source: optionistics.com)I therefore propose the following trade aimed at capitalizing on the difference in implied volatility between the above options:(Source: optionsprofitcalculator.com)The trade is also known as a calendar spread, which is a non-directional strategy (the directional risk is completely hedged). Here is the risk-return profile of this trade:(Source: optionsprofitcalculator.com)The "window of safety" with this trade amounts to around 7.5% of the current market price of the stock. I believe it is quite wide given the fact that the earnings date has passed and especially relative to historical data:(Source: Google Finance. Calculations by author)As a result, the risk-return ratio of 1.7:1 is very favorable given the low risk of significant movements in the price of the underlying (there are essentially no catalysts for volatility through the end of the week). I find it an incredibly interesting opportunity over a four-day period. What do you think?