there is no "fixed rule" on how vol skew will behave in certain condition
they are simply reflecting demand and supply from all market participants
during high volatility periods:
- front month vol skew can rise (vertically) and steepen at the same time
ex: pre-election
- or it can rise and flatten
ex: second day post-brexit
- or it can fall and flatten
ex: early morning on nov 9th
trader can monitor vol skew changes via IB volatility lab or other vol platforms
how it changes through the days..
how it changes relatively to other expirations..
after a while, trader may develop a general idea/ bias on how vol skew likely to behave
and then use the information to improve one's trading setup / existing positions
:]
they are simply reflecting demand and supply from all market participants
during high volatility periods:
- front month vol skew can rise (vertically) and steepen at the same time
ex: pre-election
- or it can rise and flatten
ex: second day post-brexit
- or it can fall and flatten
ex: early morning on nov 9th
trader can monitor vol skew changes via IB volatility lab or other vol platforms
how it changes through the days..
how it changes relatively to other expirations..
after a while, trader may develop a general idea/ bias on how vol skew likely to behave
and then use the information to improve one's trading setup / existing positions
:]