Glossary

Volatility Skew

By Rohan Fernandes, Founder · Updated 2026-08-21 · Educational reference, not investment advice

Skew is the pattern of implied volatility across strikes at a single expiration. In equities, downside puts typically trade at higher IV than upside calls, pricing crash protection at a premium; deviations from the usual shape carry information.

Skew matters twice in practice. In strike selection, the smile's richest strike near a target delta collects extra premium for the same risk profile. In directional reading, research finds smile shape carries predictive information: an unusually steep put smile is a caution signal against bullish premium selling rather than harvestable extra income, which is why a careful conviction score lets skew subtract and never add. Skew also feeds POP through per-strike IV and the smile-slope correction.

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