Are there rules of thumbs/models that you could use to develop intuition for when skew is cheap or expensive? From what I gather, volatility is a number that is backed out of price in a sense, "the wrong number to get the right answer". But then someone has to set the price, they have a sense of what the correct "skew" is, and I'm trying to understand some intuitive way of understanding.
If for instance in a 100 stock ATM vol is trading at 35, and the stock has historically moved at 30 vol, you can have some sense that 35 is expensive. However, if the 80 strike was quoted at 35 volatility, is that cheap or expensive? How would one go about trying to answer this question?
How did traders use to price skew before we had complicated models that went beyond B/S?