Implied Volatility vs Volatility Skew

The annualized standard deviation of price returns implied by the current market price of an option, derived by solving the Black-Scholes model backwards from observed market price; forward-looking measure of expected future volatility; distinct from historical volatility which measures past realized movement.

The asymmetry in implied volatility between OTM puts and OTM calls at equivalent delta distances from the current price; put skew (OTM puts more expensive) indicates bearish tail fear; call skew (OTM calls more expensive) indicates bullish tail demand; measured by the 25-delta risk reversal as a sentiment indicator.