DERIV Derivatives · Updated April 2026 · ~4 min · For TradingView desktop 3.2.1
Crypto Options Implied Volatility & Skew: An Intro
Option prices embed the market's expectation of future volatility — implied volatility (IV). High IV means expensive options and expectations of big moves; low IV means expected calm. Even for spot/perp traders, IV is a useful sentiment and risk thermometer.
Using IV levels
- Very low IV: the market is numb, volatility compressed — often the calm before a big move (like a volatility squeeze);
- Very high IV: panic or euphoria, options expensive, the move is usually already violent.
Skew: which side the market fears
Skew compares put IV vs call IV:
- Put IV > call (put skew): the market pays up for downside protection — fears a drop;
- Call IV > put (call skew): chase-the-rally sentiment — fear of missing out, common at crypto bull tops.
Tip: even if you don't trade options, IV and skew are valuable leading sentiment indicators. An IV collapse (falling after a big move) often accompanies stabilization. Combine with the sentiment index and funding for a risk dashboard.