Skew "arbitrage" is a pretty broad term. When you are trading the skew, there are 3 principal risks (or sources of P&L, if you will): (a) the actual change in the slope of the skew in the implied space. e.g. if you are trading 95% strike against 105% strike and your underlying stays in place, all of your instantaneous P&L would be due to the changes in the implied vol at each strike times the Most option traders know that puts trade for more than calls – this is called “skew.” Dr. Data (Michael Rechenthin, PhD) is here to visualize this for a more We can trade a bull call spread by going long the 65 strike call and short the 70 strike call. Now if TOP moves up to $70 like we expect we stand to make our full profit on the bull call spread. Another more advanced way to pick our strikes is by looking at an option's skew.

11 Nov 2013 After the Deepwater Horizon oil spill in the Gulf of Mexico in 2010, the largest in U.S. history, there was a lot of talk about the possibility of 

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