tasty Extras

Methods of Examining Skew

tasty Extras

Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.

Option skew can be a useful metric in gauging where traders perceive risk. For example, before a take-over event option IV tends to be higher on the call side than the put side. On the other hand, prior to Brexit puts demonstrated higher IV. Tune in to see how Alex uses the steepness of implied volatility skew to set his strikes when trading earnings.

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