Describe the math that should be done to get an estimate of options value from potential trading to purchase a

Question

option at a discount to historic volatility?

Answer 1

The math is given in any number of books, including "Options Pricing & Volatility" by Sheldon Natenberg. I will not I will not go into the details since you can compare implied volaitliy (IV) to historical volatility (HV) at

http://www.ivolatility.com/

If IV is less than HV the option is trading at a discount to historical volatility. If IV is greater than HV the option is trading at a premium.

As a comment, there is a always a reason IV to vary from HV. I do not believe it is enough to find a discount. I believe you need to determine why the discount exists and decide if the reason is justified.