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What Is a ‘Volatility Skew’ in Options Pricing?

Volatility skew is the pattern where options with the same expiration but different strike prices have varying implied volatilities.
Greeks.Live07.11.25

What Is a ‘Volatility Skew’ in Options Pricing?

Volatility skew is a phenomenon where options with the same expiration date but different strike prices have different implied volatilities. Historically, a 'smirk' (higher IV for OTM puts than OTM calls) is common, reflecting higher demand for downside protection (puts) due to fear of market crashes.

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