Don’t fret about elevated skew, vol experts say

Extreme relative cost of tail risk hedging is driven by flows more than fear


Downside equity skew — a measure sometimes taken as an indicator of nervousness in markets — has reached all-time highs, leaving investors wondering whether they should worry. Volatility experts say not. In fact, high skew may present an opportunity.

Rather than signalling trouble ahead, the extreme skew is due mostly to market flows, the experts argue.

“The volatility surface is always about how supply and demand interact,” says Yanko Punchev, senior portfolio manager at €50 billion asset

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact or view our subscription options here:

You are currently unable to copy this content. Please contact to find out more.

Sorry, our subscription options are not loading right now

Please try again later. Get in touch with our customer services team if this issue persists.

New to View our subscription options


Want to know what’s included in our free membership? Click here

This address will be used to create your account

You need to sign in to use this feature. If you don’t have a account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here