What the price of downside insurance reveals.
| Concept | Explanation | |---|---| | Option skew | Difference in implied volatility across strike prices. | | Downside skew | Protective puts trade at higher implied volatility than comparable calls. | | Tail hedging | Buying protection against rare, severe declines. | | Crash premium | Extra price investors pay for downside insurance. | | Skew steepening | Demand for protection is increasing. |