How does skew affect the pricing of options in the digital currency space?

1 answers

• Nov 27, 2021 · 3 years ago
  In the digital currency space, skew can have a significant impact on the pricing of options. Skew refers to the difference in implied volatility between out-of-the-money options and at-the-money options. When skew is high, it means that there is a higher demand for downside protection, leading to higher implied volatility and higher prices for out-of-the-money put options. Conversely, when skew is low, there is a higher demand for upside potential, resulting in higher implied volatility and higher prices for out-of-the-money call options. Traders and investors need to closely monitor skew as it can provide insights into market sentiment and potential risks in the digital currency market.
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