analysis of volatility surfaces

Volatility surfaces display how market-based expectations of future price fluctuations change for different options, across various strike prices and expiration dates. They are visual maps that help traders and investors understand how expected volatility varies with time and price levels, revealing patterns like spikes or dips. Analyzing these surfaces assists in pricing options more accurately, identifying market sentiment, and spotting potential opportunities or risks. In essence, they provide a comprehensive picture of the market's uncertainty expectations, supporting informed decision-making in trading and risk management.