Horizon Pharma plc (HZNP) is focused on identifying, developing, acquiring or in-licensing and commercializing differentiated products. It markets approximately nine medicines through its orphan, primary care and rheumatology business units. Its segment focuses on the identification, development, acquisition and commercialization of differentiated and accessible medicines. Its marketed medicines include ACTIMMUNE (interferon gamma-1b), BUPHENYL (sodium phenylbutyrate) Tablets and Powder, DUEXIS (ibuprofen/famotidine), KRYSTEXXA (pegloticase), MIGERGOT (ergotamine tartrate and caffeine suppositories), PENNSAID (diclofenac sodium topical solution) 2% w/w, or PENNSAID 2%, RAVICTI (glycerol phenylbutyrate) Oral Liquid, RAYOS (prednisone) delayed-release tablets and VIMOVO (naproxen/esomeprazole magnesium). It is reporting earnings on Monday, August 8, before market open: (Source: TD Waterhouse)As evident from the above, the company beat earnings estimates in 88% of time in the last eight quarters, showing in-line results in 12% of time, and has seen modest volatility in the market price of its stock over the last three months: $HZNP, Horizon Therapeutics Public Limited 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 undervalued: (Source: TD Waterhouse)The two-week straddles (options with a strike price of $20.00 and expiring on August 19, 2016) are worth around 16.1% 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: Yahoo Finance. Calculations by author)As you can see, the stock has had a monthly standard deviation of 25.9% over the last 52 weeks, while the straddle expiring in a bit less than three weeks has an implied monthly volatility of around 18.9% (calculated based on 11 business days remaining until expiration), also including volatility from the earnings event next week. I therefore see signs of modest undervaluation in these options. Hence, buying the straddles is a good idea from a theoretical standpoint.Investors may also be interested in selling call options against the stock to to lower the cost basis of their holdings: (Source: optionsprofitcalculator.com)On the one hand, this will limit expected returns. On the other hand, this action will minimize losses in the event the stock goes south over the next two weeks. The risk-return profile of this trade looks like this: (Source: optionsprofitcalculator.com)As you can see from the above illustration, Horizon's investors can pocket a 160% annualized return in these three-week calls. On the other hand, if the stock goes higher than $20.00 per share (an increase of over 5%) in the next two weeks, they will get a ~170% annualized return (the premium from the calls and the upside from the stock up to $20.00 per share). What do you think of this trade?