Options Skew Signals OptimismOct 5, 2021
Option skews help us establish a rough base for forward-looking market sentiment. The Oct. 2021 skew has a tail towards lower strikes (higher implied volatility) but not towards the higher strikes. Typically, this means the options market isn’t too positive in the near term.
However, Nov. and Dec. 2021 skews look positive with higher implied volatility for strike prices above the current market price. Skews for expiries in 2022 are more balanced and signal a more neutral outlook given how far out these options are dated.