Why do options on the same stock have different implied volatilities?
Because each option's price is set by its own buyers and sellers, and implied volatility is worked backwards from that price 1. Options on one stock trade at different implied volatilities across strikes, which traders call the skew 1.
One expiry of StrikePath's made-up option surface (an SSVI smile, not market data): implied volatility across strikes. Choose an expiry.
On the made-up surface
For the 30-day expiry of StrikePath's synthetic surface, the option at the stock's price ($106.00) is priced at 19.3% implied volatility, the lowest strike ($63.60) at 39.9%, and the highest ($148.40) at 22.6%. StrikePath's tests check that this made-up curve is free of arbitrage.
What it means for the other pages
The other pages here price every strike at one volatility, to keep each example simple. On this surface, pricing every strike at the volatility of the option at the stock's price would understate the low strikes' prices.
What this shows, and what it doesn't
A made-up surface, not market data. That low strikes carry the highest volatility here describes this surface, not a rule.
Go further
Sources (1), each checked 20 October 2026
- CME Group, “Implied Volatility”. Read it (read 20 October 2026)
Now try it on a scenario of your own
Pick where a simulated stock might be, and by when: drag one dot and see, side by side, what buying shares, one option, or a pair of options (a call or put spread) would each do. Free, no sign-up.
Check a trade before you make it →