# Volatility Skew — StockMojo

> Put/call IV differential analysis

- Live page: https://stockmojo.in/volatility-skew
- Content last updated: 2026-04-21
- Platform: StockMojo — free options analytics for Indian markets (NSE F&O)

This is a machine-readable markdown mirror of the live tool page. The live page shows real-time NSE data during market hours (09:15-15:30 IST) and supports 200+ F&O symbols via per-symbol URLs like https://stockmojo.in/volatility-skew/banknifty.

## Frequently asked questions

### What is volatility skew?

Volatility skew is the pattern of implied volatility across strike prices for the same underlying and same expiry. Theory says IV should be flat across strikes; in real markets it almost never is. A worked example: with Nifty at 22,400, the ATM 22,400 strike might price at 14% IV, the 23,400 OTM call at 16%, and the 21,400 OTM put at 19%. That asymmetry is the skew. On Indian indices it almost always slopes higher on the put side, reflecting persistent demand for downside hedging.

### What's the difference between forward skew and reverse skew?

Reverse skew (also called positive skew) is when calls trade at higher IV than puts. You see this in stocks under buyout speculation or strong upside momentum names. Forward skew (negative skew) is when puts trade at higher IV than calls, the dominant pattern on Nifty, BankNifty, and most equity indices globally. The reason is that destructive moves in indices are typically faster and more brutal than rallies, so puts carry a structural risk premium.

### What does a steep put-side skew on Nifty mean?

When Nifty OTM puts have materially higher IV than the corresponding OTM calls, it signals strong demand for downside protection — institutions are paying up for puts. Steep put skew is often a warning sign that professional traders are hedging against a drawdown, even if spot looks calm. It's a contrarian signal at extremes.

### What is a volatility smile versus a skew?

A volatility smile is a symmetric U-shape where both OTM puts and OTM calls trade at higher IV than ATM options — common in single-stock options around earnings or events. A skew is asymmetric, with one side priced materially higher than the other — typical for indices where put-side skew dominates. Both are deviations from flat IV and both encode useful information.

### How do I trade using volatility skew?

Premium-selling strategies profit from selling the expensive side of the skew — for example, selling overpriced Nifty OTM puts when put skew is unusually steep. Risk-reversals (long one side, short the other) isolate the skew trade itself. Directional traders watch skew shifts as early warnings: a sudden flattening during a sell-off often marks a bottom; a steepening during a rally often marks a top.

### Why does Nifty almost always have put skew?

Structural demand for portfolio protection. Mutual funds, insurance companies, and institutional investors continuously buy Nifty puts to hedge their long equity exposure. This persistent buying pressure pushes put IV higher than call IV. Even in strong bull markets, Nifty put skew rarely disappears — it just becomes less steep.

### What is the 'lowest IV' marker on the skew chart?

The lowest IV point on the skew curve is the strike where implied volatility is minimized — typically very close to the forward or spot price. It's a useful anchor: it tells you where the market considers options fairly priced, and it helps identify the true ATM strike for strategy construction. On Nifty, the lowest-IV strike often moves 25-50 points from week to week even when spot is range-bound.

## How to read the Volatility Skew chart

1. **Select symbol and expiry** — Choose Nifty, BankNifty, or any F&O stock and pick a weekly or monthly expiry.
2. **Identify the skew direction** — Check whether IV is higher on the put side (downside skew, common for indices) or call side (upside skew, common in momentum stocks).
3. **Compare versus history** — Toggle historical T-day overlay to see whether today's skew is unusually steep or flat versus the past 5 sessions.
4. **Spot the lowest-IV strike** — Locate where IV bottoms. This is the market's implied forward price and the natural ATM reference.
5. **Pick your strategy bias** — Use steep skew for premium-selling (sell the rich side), flat skew for long-volatility plays, and skew transitions for directional entries.

## Related tools

- [IV Chart](https://stockmojo.in/iv-chart) — markdown: https://stockmojo.in/iv-chart.md
- [IV vs HV](https://stockmojo.in/iv-hv) — markdown: https://stockmojo.in/iv-hv.md
- [ATM Straddle](https://stockmojo.in/straddle-chart) — markdown: https://stockmojo.in/straddle-chart.md

## Glossary

Terms used: implied-volatility, volatility-smile, put-skew, option-pricing. Definitions: https://stockmojo.in/glossary