What Market Event Typically Causes the Volatility Skew to Steepen?

The volatility skew typically steepens during periods of market stress or significant uncertainty, especially when there is a sharp sell-off. A steepening skew means the implied volatility of OTM put options rises much faster than that of OTM call options.

This is a direct reflection of increased demand for downside protection (puts) as traders fear further, rapid price declines, thereby driving up their premiums and IV.