Implied Volatility Skew Explained
Implied volatility skew explained. Learn why IV differs by strike, how skew affects pricing, and how traders use skew in options analysis.
Frequently asked questions
Is IV skew bullish or bearish?
Skew is not inherently bullish or bearish. It reflects relative demand across strikes. A steep put skew often signals protection demand, but it does not determine price direction by itself.
How is skew different from IV percentile?
IV percentile compares today's IV to historical IV over time. Skew compares IV across strikes at one point in time. They provide different but complementary context.
Can skew change during the day?
Yes. Skew can shift intraday as traders reprice risk, hedge positions, and react to news. Liquidity conditions can also influence how sharply IV differs across strikes.