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Options Skew: The Hidden Indicator You Need to Know

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0:00lesson

Volatility skew analysis

  • Options volatility skew = analysis of non-symmetrical options prices
  • Symmetrical options (same distance from stock price) differ in price
  • Call skew = more expensive upside options
  • Put skew = more expensive downside options
1:54AMD· ticker

AMD — call skew, $645 closing price

  • AMD closing price = $645
  • 750 call = $1,700
  • 550 put = $1,100
  • Call skew = more expensive upside options
  • Market perceives upside risk velocity
3:57SPX· ticker

SPX — put skew, $7,800 closing price

  • SPX closing price = $7,800
  • 7,800 put = $3,900
  • 8,000 call = $2,700
  • Put skew = more expensive downside options
  • Market perceives downside risk velocity
5:59SPY· ticker

SPY — downside butterfly, $777 closing price

  • SPY closing price = $777
  • 767-757 butterfly = $0.70
  • 787-797 butterfly = $1.20
  • Downside skew = cheaper butterfly
  • Upside skew = more expensive butterfly
8:01SPX· ticker

SPX — long-term skew, $27 days out

  • SPX call = $10,000
  • SPX put = $9,500
  • Interest rate hikes = higher call value
  • Long-term skew = interest rate premium
  • 2027 call = $26,000
  • 2027 put = $19,000

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