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Back to Glossary
General TradingO

Options Skew

The difference in implied volatility between out-of-the-money, at-the-money, and in-the-money options. Skew reflects the market's perception of directional risk and demand for protective options.

Example

“The put skew on SPX options steepened sharply as traders rushed to buy downside protection, indicating growing fear of a market selloff.”