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Understanding Options Skew

Understanding Options Skew

Aired On

May / 12 / 2026 - 12:00 pm - ET

Mathew Cashman
OCC

Options skew is one of the more important, and often misunderstood, features of the options market. While implied volatility is frequently discussed as a single number, options with different strike prices can carry different implied volatility levels, even when they share the same expiration date. This presentation will explore what option skew is, why it exists, and how market participants may interpret different skew shapes, including put skew, call skew, and smile skew. We will also discuss practical ways to measure and track skew using option prices, implied volatility levels, and volatility ratios.

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This material is from OCC and is being posted with its permission. The views expressed in this material are solely those of the author and/or OCC and Interactive Brokers is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to buy or sell any security. It should not be construed as research or investment advice or a recommendation to buy, sell or hold any security or commodity. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

Disclosure: Options Trading

Options involve risk and are not suitable for all investors. For information on the uses and risks of options, you can obtain a copy of the Options Clearing Corporation risk disclosure document titled Characteristics and Risks of Standardized Options by going to the following link ibkr.com/occ. Multiple leg strategies, including spreads, will incur multiple transaction costs.

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