Derivatives
Volatility Skew
Definition
What is Volatility Skew?
An asymmetrical pattern of implied volatility across strike prices.
Example in practice
How This Looks in Practice
Equity put options often carry higher implied volatility than comparable calls.
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Related Terms
Derivatives
Derivative
A contract whose value depends on an underlying asset, rate, index, or event.
DerivativesUnderlying Asset
The asset, rate, index, or reference on which a derivative's value is based.
DerivativesNotional Amount
The reference amount used to calculate derivative payments, which may exceed the cash initially exchanged.
Derivatives StrategiesCovered Call
A strategy that owns the underlying asset and sells call options against it.