Volatility Skew vs Volatility Smile

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.

The pattern that emerges when implied volatility is plotted across option strikes for the same expiry; deviates from the flat IV assumed by Black-Scholes; in crypto markets, both OTM calls and OTM puts often carry higher IV than ATM options, reflecting two-sided tail risk expectations.