Volatility Smile

Implied volatility across strikes, for one expiry of one name. See Reading The Options Suite for how to read it.

At a glance

• An option. A contract that lets someone buy or sell shares at a set price. Every option runs out on a set date. That date is its expiry.
• Implied volatility. The price tag an option carries for uncertainty. Think of it as an insurance quote. It is stated as a yearly percentage. Traders shorten it to IV.
• Strike price. The set price at which an option lets someone buy or sell the shares. Strikes below the share price sit on the left of the chart. Strikes above it sit on the right.
• The smile. The name for the line this chart draws. It plots the insurance quote at each strike. The line often lifts at both ends and dips in the middle, and that shape is where the name comes from.
• The number the pane prints. One figure, labelled downside IV minus upside IV. It is the quote from the left half minus the quote from the right half, stated in points. A point is one step of that yearly percentage. Six points means the left figure is six higher than the right one, for example 34% against 28%.
• The usual shape. Strikes below the share price normally carry a higher figure than strikes above it. The chart shows how much higher.
• The small chart in the corner. It puts that same gap side by side for every expiry we captured.
• Market data. Every figure here restates prices the options market has already quoted. The capture is from the previous trading day.
• Not live either. The figures come from one snapshot taken each night, which we call the capture. They are from the previous trading day, not from the day you are reading them on. Key difference: the main chart = one expiry across many strikes. The small chart = one gap figure across many expiries.

What it shows

The chart plots implied volatility up the side and strike price along the bottom.

• Expiry chips. Buttons across the top. They switch which listed expiry the line is drawn for, up to ten of them.
• The starting expiry. Whichever listed expiry sits nearest 30 days out.
• The share price line. A dashed vertical line. It marks the share price at the time of the capture.
• The readout line. It prints the words downside IV minus upside IV, then a number, then the word points. In brackets after that it prints 90% vs 110% strikes and the expiry date it used. The number is the figure quoted near 10% below the share price, minus the figure quoted near 10% above it.
• The inset. A small chart in the corner. It plots that same downside minus upside gap across every captured expiry at once.
• Hover. Rest the pointer on the line. A box shows three things: the strike price, how far that strike sits from the share price, and the implied volatility quoted there. The box also states that the figure is averaged across calls and puts.

The table under the curve

Added 2026-09-16: the 90/110 pair for every expiry the chain quotes both legs for, the same points the inset plots, as a plain list. Clicking a row draws that expiry; the drawn expiry's own row is lit.

• Expiry and Days. The listed expiry date and how many days remain until it.
• Down, 90%. Implied volatility at the strike nearest 90% of the share price, the downside leg.
• Up, 110%. Implied volatility at the strike nearest 110% of the share price, the upside leg.
• Gap, pts. Downside minus upside, in volatility points, the risk reversal traders call skew. A bar behind the figure is the size of the gap.

Play forward

A strip under the readout moves the pane to a later date. Every options pane that shows the chain moves with it.

• What rolls off. Every expiry on or before the date leaves the chips and the table. A drawn expiry that has gone moves to one still open.
• The line under the strip. The forward volatility from the drawn expiry to the next one. It is named rich, cheap or level against the drawn expiry's own at the money reading.
• What forward volatility is. The volatility the quotes price for the stretch between the two dates alone. Take the later date's implied variance to its expiry, less the earlier one's, over the days between.
• The words. Rich is more than 5 percent above the front's own reading. Cheap is more than 5 percent below it. Level is anything between.
• At today. No second line, and the pane is unchanged.

Using it for a decision:

• Timing a calendar spread. A long calendar spread sells the nearer expiry and buys the later one. When the stretch between them reads cheap, the later month costs less for the time it adds.
• Choosing an expiry. Draw each expiry in turn. A stretch that reads rich marks a date the market prices more movement into, such as an earnings report. It is arithmetic on last night's quotes, not a forecast of volatility.

Reading it well

• A steeper left-hand half. It means the market is charging more for strikes below the share price than for strikes above it. The gap is measured in volatility points. It describes prices already quoted, not the stock's future.
• The inset. Use it to see whether the gap holds across dates. A gap at every expiry is part of how this stock's options are priced generally. A gap at the nearest date only is tied to that one date.
• The dashed line. It marks the share price, so you can see how far a strike sits from it without doing the arithmetic yourself.

Common misreadings. - The smile is market pricing. A steep line says buyers are paying more for strikes below the share price. The gap is routine across most stocks. - Calls and puts are not shown apart. Options come in two kinds. A call is the right to buy, and a put is the right to sell. The pane shows one averaged figure per strike, because that is what the capture holds. It is not saying calls and puts are priced the same at every strike.

Frequently asked questions

Does a steeper downside curve say the stock will fall? No. It says the options market is charging more for strikes below the share price than for strikes above it. It says nothing about where the share price goes. What is "implied volatility"? The movement rate baked into an option's market price, quoted as a yearly percentage. Read it like an insurance quote: what cover costs today, not what happens next. See Reading The Options Suite for the vocabulary the whole suite shares. Why is there only one line instead of separate call and put curves? The nightly capture stores one implied volatility per strike, averaged across calls and puts. We do not have a call only or a put only quote, so the pane does not invent one. What is the inset chart in the corner showing? The same downside minus upside gap that the readout line states for one expiry. The inset plots it across every captured expiry at once. That shows whether the gap sits only at the nearest date, or holds across every expiry, near and far. Traders call that run of dates the term structure. Does this name a strike to buy or sell? No. Every number here restates what the market has already priced. Nothing here suggests a strategy or names a strike to trade. How is the downside minus upside figure worked out? Implied volatility at the strike nearest 90% of the share price, minus implied volatility at the strike nearest 110% of it. The answer is stated in volatility points. Some traders call this figure the skew. How current are these numbers? Not live. We take one snapshot of the options market each night, from the previous trading day's option chain. The pane shows that snapshot until the next one. During the trading day the figures on screen are from the trading day before. After a weekend or a market holiday they are older still. The dashed line is the share price at that same capture.

Related panes

• Reading The Options Suite. The shared primer: the vocabulary, and the copy rules every options pane follows.
• The Panes. The full map of every pane, grouped by workspace.
• Volatility Surface. The same pricing, across every strike and every expiry at once, drawn as a heat map.
• Volatility Weather. The at the money implied volatility across time frames, instead of across strikes.