Skew (Option / Stock Pricing)

Skew refers to the uneven pricing of options across different strike prices or expirations, typically caused by supply and demand. In most markets, put options tend to be more expensive than call options due to downside risk protection, creating a volatility skew. Skew can also appear in short-term versus long-term options (time skew) or in single stocks compared to broad indexes (index skew). Some traders watch skew to gauge market sentiment and identify potential trading opportunities.