Volatility Skew Definition
Contents
Deciphering Volatility Skew: Unraveling Market Sentiment
Unlock the intricacies of volatility skew and its implications on options trading strategies and market sentiment.
Demystifying Volatility Skew
Explore the concept of volatility skew, dissecting the disparities in implied volatility across different options strikes. Understand how market sentiment and supply-demand dynamics influence the volatility skew, providing insights into fund managers' preferences and trading behaviors.
Navigating the World of Options Trading
Delve into the historical evolution of volatility skew, tracing its origins to the 1980s when traders uncovered discrepancies in options pricing models. Learn about the phenomenon of volatility smile and smirk, visual representations of the relationship between implied volatility and strike prices.
Understanding Market Volatility
Grasp the essence of market volatility and its pivotal role in options pricing and risk assessment. Gain insights into implied volatility and its significance as a predictive metric for future price movements, leveraging tools like the Black-Scholes option pricing model.