This article was originally published in The Option Strategist Newsletter Volume 14, No. 9 on May 12, 2005.
Occasionally, options on a particular entity (usually a stock or, less frequently, an index) will become so skewed that they are actually skewed in two directions – both horizontally and vertically. We saw dually skewed situations with some frequency in the fall of 2002, when traders felt that there was substantial risk of near-term volatility (hence, a horizontal skew arose), coupled with the possibility of further large declines in stock prices (so a reverse, or negative, skew arose as well).
