If you're navigating options trading, understanding how implied volatility moves across strikes offers valuable insight into how traders are pricing risk. The "Change in IV Skew" tutorial from Market Chameleon shows you exactly how to visualize and interpret those shifts—and use them to your advantage.
Implied volatility (IV) isn’t a fixed number—it varies across different strike prices within the same expiration window. The IV Skew is a curve that plots these variations, giving a clear picture of how volatility changes from one strike to the next. Tracking changes in that curve allows you to feel the pulse of market sentiment in real time.
On the GOOGL Option Chain Volatility Skew tool, Market Chameleon provides:
Current vs. Previous-Day IV Lines: A blue line shows today’s implied volatilities, while a red line represents yesterday’s. This visual makes it intuitive to see if IV has moved up, down, or stayed stable.
Midpoint IV Reference: Instead of relying on bid or ask alone, the chart uses the midpoint between them to create a more reliable benchmark, similar to comparing today’s IV with a fair market estimate from the previous day.
Interpreting the IV Smile: The shape of the curve reveals where the market expects volatility to rise or fall. For example, a rising left side suggests growing concern about downside risk; a flattening rise on the right can indicate eased expectations for upward volatility.
Imagine the blue line dips below the red for most strikes, except for lower puts. That signals market calm overall, but heightened downside caution—a nuanced shift you can see immediately. Knowing this helps you assess whether to dig deeper into specific contracts or adjust your strategies.
Understand the mood of the market—are traders anticipating a bump in volatility, or is the market settling?
Focus your research on options with unusual changes, rather than combing through long chains.
Shape your approach with a clearer view of where risk is being priced in, whether that's in puts, calls, or the middle of the curve.
Implied volatility Skew isn’t just another chart line—it’s a story of sentiment shifting throughout the option chain. With Market Chameleon’s intuitive IV Skew tool, you get that narrative in a glance, without the noise. If you're aiming to trade more confidently, this is a smart place to start.
Explore it here: https://marketchameleon.com/Overview/GOOGL/OptionChain/?ac=volskew
Financial Disclosure: Market Chameleon is not a registered investment advisor, broker-dealer, or financial advisor. This material is provided solely for educational and informational purposes. It should not be considered investment advice or a suggestion to buy or sell securities. Always consult a licensed professional when making investment decisions.