What Is the Difference between Volatility Skew and Volatility Smile? ⎊ Path

What Is the Difference between Volatility Skew and Volatility Smile?

Volatility skew describes a monotonic relationship where implied volatility either consistently increases or decreases as the strike price moves away from the At-the-Money (ATM) strike. A volatility smile is a non-monotonic pattern where IV is higher for both OTM calls and OTM puts compared to the ATM option, forming a U-shape.

In practice, the crypto market often exhibits a "smirk," which is a type of skew where the curve is steeper on the put side.

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