Options Glossary

Glossary: Volatility Skew

Last Updated: July 12, 2015


Volatility Skew

What Does Volatility Skew Mean in Options Trading?

It's the difference of volatility among different strike prices of options of the same underlying security. This is created most of the time in stocks by more demand and higher premium paid for puts than for calls. This is because the majority of the market is long the market at any given time and insurance (hedging) of portfolio risk is in high demand.

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