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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 65% of retail investor accounts lose money when trading CFDs with this provider.
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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 65% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs, FX or any of our other products work and whether you can afford to take the high risk of losing your money.
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Glossary

Volatility Smile Chart

Definition

The Volatility smile chart refers to the shape of the graph. The ‘smile’ shape results from plotting the strike price, which is the fixed price at which the owner can buy or sell the option, with the implied volatility of a group of options with the same underlying asset and expiration date. 

Implied volatility rises when the underlying asset of an option is further out-of-the-money (OTM) or in-the-money (ITM) compared to at-the-money (ATM).

You can select up to 5 expiries to compare the deformation of the smiles across those expiries. The volatility smiles show that ITM and OTM options tend to be more in demand than ATM. Implied volatility is impacted as demand drives prices.

Related Items

3D Volatility Chart In the money (ITM) Out of the money Probability Envelope Chart
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