what is a volatility smile 
a volatility smile is a common graph shape that results from plotting the strike price and implied volatility of a group of options with the same underlying asset and expiration date the volatility smile is so named because it looks like a smiling mouth 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 the volatility smile does not apply to all options 