How to find out if the option is undervalued or not? Hi all, I have been observing the options for a while and I have a question about how to value the call/put options. I know the Black Scholes formulae and understand how it was derived. However, there is a parameter called volatility that is tricky. In order to calculate the fair value of the option, I need the volatility. But where do I find out the volatility? There can be two ways: one is to do a historical stock price analysis to obtain historical volatility; another is to back out from the BS formulae using historical option price, etc. And perhaps there are more tricks here. Anybody can give me some pointers? My goal is to find out which option is undervalued so I can buy or over-valued so I can sell. I am an individual(small) investor. Thanks a lot!