Volatility Skew
Volatility skew describes differences in implied volatility across option strikes for the same underlying and expiration.
Why it matters to you
Options on the same asset and with the same expiration do not necessarily trade at the same implied volatility. Demand for downside protection, upside speculation, perceived tail risks and market structure can contribute to different IV levels across strikes. Skew helps traders understand where volatility is relatively expensive or cheap across the option chain.