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What Does a “Volatility Skew” Tell a Trader about Market Sentiment?

The difference in IV across strike prices, showing market's preference for hedging one direction (e.g. puts).
Greeks.Live28.10.25

What Does a “Volatility Skew” Tell a Trader about Market Sentiment?

Volatility skew, or smile, is the pattern of implied volatilities for options with the same expiration date but different strike prices. A typical "put skew" in crypto (higher IV for out-of-the-money puts) indicates that traders are willing to pay more for downside protection, reflecting a fear of a market crash.

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