What Is a "Volatility Skew" in Options Markets? ▴ Learn

What Is a “Volatility Skew” in Options Markets?

Volatility Skew (or smile/smirk) is the phenomenon where options with the same expiration date but different strike prices have different implied volatilities. Historically, out-of-the-money (OTM) Put options (protection against a market crash) often have higher IVs than OTM Call options, creating a "skew" in the volatility surface.

This reflects market demand for downside protection.

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