What is a Volatility Skew Chart?
A volatility skew chart plots the implied volatility (IV) of options against their strike prices for a given expiration date. In an ideal Black-Scholes world, implied volatility would be constant across all strikes. In practice, IV varies significantly — creating distinctive patterns known as the volatility "smile" or "smirk" that reveal how the market prices risk at different price levels.
Our free Options Volatility Skew Chart pulls real-time data from the options market, so you can instantly see the IV curve for any optionable stock or ETF. By overlaying multiple expiration dates on the same chart, you can compare how the skew shape evolves across the term structure — a technique used by professional volatility traders to find relative value.
Common Volatility Skew Patterns
Reverse Skew (Smirk)
The most common pattern in equity markets. Out-of-the-money (OTM) puts carry higher IV than OTM calls, reflecting demand for downside protection. This "crash phobia" premium is especially visible in index options like SPY and QQQ.
Volatility Smile
Both OTM puts and OTM calls have higher IV than at-the-money (ATM) options, forming a U-shape. Common in forex markets and during periods of extreme uncertainty when the market fears large moves in either direction.
Forward Skew
OTM calls have higher IV than OTM puts. This is rare in equities but can appear in commodities (supply shortage fears) or in stocks with takeover speculation, where the market prices in a potential upside jump.
Flat Skew
IV is relatively uniform across strikes, indicating market complacency with no strong directional bias. Often seen during low-volatility, range-bound periods. Iron condors and strangles tend to be more symmetrically priced.
How to Use This Volatility Skew Chart
- 1
Enter a Ticker
Type any optionable stock or ETF symbol (e.g., AAPL, SPY, TSLA) and click "Load Skew" to fetch the live option chain data.
- 2
Choose Calls or Puts
Select whether to plot call IV or put IV. Each contract type produces its own skew shape — comparing both reveals the full volatility surface.
- 3
Select Expiration Dates
Pick up to 5 expiration dates to overlay on the same chart. This lets you compare near-term vs. far-term skew and spot term structure anomalies.
- 4
Analyze the Skew Shape
Look for the characteristic smile, smirk, or flat pattern. Steep skew on the put side signals fear; elevated call skew signals bullish speculation. Use the data table below the chart for detailed Greeks and open interest.
Trading Strategies Using Volatility Skew
Exploiting Steep Put Skew
- Bull Put Spreads: When OTM puts are expensive due to steep skew, selling put spreads captures elevated premium while limiting downside risk.
- Risk Reversals: Buy cheaper OTM calls and sell expensive OTM puts to establish a bullish position funded by the skew differential.
Comparing Skew Across Expirations
- Calendar Spreads: If near-term skew is steeper than far-term, calendar spreads can capture the IV differential as near-term premium decays faster.
- Diagonal Spreads: Combine different strikes and expirations to exploit both skew and term structure simultaneously.
Identifying Relative Value
- Butterfly Spreads: When the skew shows a pronounced smile, selling the expensive wings via butterfly spreads can profit from mean reversion in IV.
- Ratio Spreads: Sell more OTM options (with higher IV) than you buy ATM options to capture the IV differential, while managing directional risk.
Why Overlay Multiple Expiration Dates?
Professional options traders rarely look at a single expiration in isolation. By overlaying multiple expiration dates on the same skew chart, you can observe how the volatility surface changes across time. Near-term expirations tend to have steeper skew because of event risk (earnings, FOMC meetings), while longer-dated expirations often show flatter curves as uncertainty gets priced more evenly.
Spotting divergences between near-term and far-term skew can reveal opportunities in calendar spreads, diagonal spreads, and other multi-leg strategies. For example, if the 30-day skew is significantly steeper than the 60-day skew, it may indicate that the market is pricing in a near-term event that creates a temporary premium in short-dated puts.