implied volatility skew

Implied volatility skew refers to the pattern where options with different strike prices (the prices you can buy or sell at) show varying levels of expected price fluctuations (volatility). Typically, options that protect against big drops (out-of-the-money puts) have higher implied volatility than those that profit if prices rise. This skew reflects market fears, supply and demand, and expectations of future volatility. It indicates that traders see certain price moves as more likely or riskier, causing the implied volatility to differ across strike prices rather than remaining uniform.