HGSI has a binary event taking place today with the FDA approval of their lupus drug. Which if you are the guy pictured above, you will never use it.
The question is: can you trade this event using options?
The easy answer is maybe, depending on what you're willing to risk, and whether you think the risk is being properly priced in. HGSI has seen binary events before, if you check out the chart, it ran from 3.50 to 11, then had a trend all the way up to the high 20s. So this thing can move on earnings.
The current November straddle is going for about 8.00, so the options market is looking for that sort of move by Friday-- 95% of that price is related to the event, not time.
So I would never be naked short options-- no straddles, strangles, sold puts or calls. Everything must be covered by more OTM options. So if you think the FDA approval will be positive, you could play it directionally via bull put spreads, or if you want to get more aggressive, bull put spreads that finance a call buy. If you want to go for the non-directional route, I'd look at iron condor sales, coupled with a call buy as an upside hedge. So if it breaks down big you're at a loss, but not as great if you sold puts for "income."
The "best" play is not to play at all-- instead, you play the runup to the event, because vols will definitely get bid up into the event. So long options maybe 2 weeks before and exiting prior to the approval news would most likely have been a profitable trade in this case.