What Is a Volatility Skew?
A volatility skew, or volatility smile, describes the pattern where implied volatility (IV) is not constant across all strike prices for options with the same expiration date. Typically, OTM put options have higher IV than ATM options, and OTM call options may have lower IV, creating a skewed curve.
Glossar
Volatility Skew
Bias ⎊ This term describes the non-symmetrical relationship between implied volatility levels for options with different strike prices, indicating a market bias toward expecting larger moves in one direction.
Otm Put Options
Application ⎊ OTM Put Options are contracts granting the holder the right to sell the underlying crypto asset at a specified strike price below the current market price, possessing no intrinsic value at initiation.
Implied Volatility
Expectation ⎊ This value represents the market's consensus forecast of future asset price fluctuation, derived by reversing option pricing models using current market premiums.
Strike Prices
Definition ⎊ Strike Prices represent the fixed price at which the holder of an option contract has the right, but not the obligation, to buy or sell the underlying cryptocurrency asset upon exercise.
Otm Call Options
Valuation ⎊ Out-of-the-money call options in cryptocurrency markets represent a contingent claim, deriving value primarily from implied volatility and time to expiration, rather than intrinsic value given the underlying asset’s current price.