Oracle reported earnings today after the market close. The December options expire tomorrow had tremendously high implied volatility (IV) before the close today.
I was bullish on ORCL shares, but wanted to put on a trade that would take advantage of the high implied volatility (and may position myself for a nice rally into January 2011).
The trade I had put on is a Dec/Jan 32.00 Calendar spread. I sold the Dec 32-strike CALL and bought the Jan 32-strike CALL. The trade is most profitable if ORCL trades at 32.00 by 4:00 PM tomorrow with 1 to 2.5 risk/reward.