Trading term

What is Volatility skew (options skew)?

Volatility skew is the difference in implied volatility between out-of-the-money puts and out-of-the-money calls that sit the same distance from the price. Positive skew means puts are dearer — the market is paying more to protect against a fall. Negative skew means calls are dearer. It's usually measured at 25-delta on a 30-day expiry, in volatility points.

Every strike on an option chain has its own implied volatility, and they don't sit flat. Plot them across strikes and you get a curve: the smile, or when one side is higher, the skew. The standard measure is the risk reversal — the implied volatility of a 25-delta put minus that of a 25-delta call, both roughly a 25% chance of finishing in the money, both about the same distance from the price.

Stock index options have been put-skewed on almost every trading day since the 1987 crash: people who own stocks buy protection and the people who sell it charge for the tail. Bitcoin's skew has no resting side. Reconstructed from Deribit's daily option closes since 2021, it was on the put side only about 45% of the time, and its sign runs in regimes — put-skewed for most of 2022, call-skewed for two and a half years from February 2023, put-skewed again since September 2025. The record put skew, about +38 points on 17 June 2022, came the day before the 2022 low.

For example

Bitcoin is at $76,000. A 30-day put at $71,000 (about 25-delta) trades at an implied volatility of 36; a 30-day call at $81,000 (about 25-delta) trades at 34. The skew is +2 points: the market is paying slightly more to insure the downside than to chase the upside. On 17 June 2022 the same two numbers were 126 and 88 — a skew of +38.

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Why it matters to you

It is the price of one side of the market relative to the other. If you buy puts for protection, the skew is what you pay over and above the level of volatility; if you sell calls against a position, it's what you're paid. It also tells you which side the crowd is hedging — and on bitcoin, the most lopsided readings in either direction have marked crowded trades near turns rather than the start of the move they feared.

⚠ Reading a put skew as a warning

A rising put skew means protection got more expensive, which mostly happens after a fall, not before one. Of the twelve biggest one-day falls in bitcoin since 2021, seven began from a call-skewed market, and days with a skew above +10 were followed by an up month more often than the average day. The skew reacts to the last move. It has not predicted the next one.

Frequently asked questions

What is options skew?

The gap between the implied volatility of out-of-the-money puts and out-of-the-money calls the same distance from the price, usually measured at 25-delta on a 30-day expiry. Positive means puts are dearer; negative means calls are.

What is a risk reversal?

The same number, named for the trade that isolates it: buying a 25-delta put and selling a 25-delta call (or the reverse). Its price in volatility points is the skew.

Is bitcoin's skew usually positive?

No. Unlike stock indices, which are almost always put-skewed, bitcoin's 30-day 25-delta skew has been on the put side less than half the time since 2021. It flips sign in regimes that last months, following the trend rather than leading it.

Read the full guide

DerivativesHow to Read Options Skew and the Put/Call RatioOptions skew is the gap between what the market pays for puts and for calls. The put/call ratio is how many of each are trading. Both are sold as fear gauges. Reconstructed from every Deribit option close since 2021, bitcoin's skew was on the put side only 45% of the time, its most lopsided days marked bottoms rather than tops, and it was on the call side the evening before seven of the twelve biggest one-day falls.12 min read

Related terms

Call optionA call option is a contract giving the buyer the right — but not the obligation — to buy an asset at a fixed 'strike' price before a set expiry date. Call buyers are betting the price will rise; their risk is capped at the premium paid, while the potential profit is open-ended.Cash-secured putA cash-secured put is an options strategy where you sell a put option while setting aside enough cash to buy the stock if you're assigned. You collect the premium as income; in exchange, you agree to buy the stock at the strike if it falls there. It's a way to get paid to buy a stock you want at a lower price.Covered callA covered call is an options strategy where you own 100 shares of a stock and sell a call option against them. You collect the premium as income; in exchange, you cap your upside at the strike. It's a popular way to generate income on shares you're happy to hold or sell.DeltaDelta measures how much an option's price moves for each $1 change in the underlying. A delta of 0.60 means the option gains about $0.60 if the stock rises $1. It ranges from 0 to 1 for calls (0 to −1 for puts) and doubles as a rough probability the option finishes in the money.
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