Volatility Surface
The three-dimensional shape mapping implied volatility against strike and expiration for a given underlying. The surface integrates the smile (IV variation across strikes at one expiration), the skew (asymmetry between upside and downside strikes), and the term structure (IV variation across expirations). Reading the surface tells an investor how the market is pricing risk across the full strike-expiration grid -- where insurance is expensive, where it is cheap, and which scenarios the market most fears.
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Related terms
American Option · Asian Option · Barrier Option · Basket Option · Butterfly Spread · Calendar Spread
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