macrocephalopod

To an option trader, puts and calls are the same thing. Why do you think that is?

Then why is there a volatility smirk if you treat them the same?

They're not identical (if different strikes). But if upside calls are overpriced, more than likely downside puts are too. @KrisAbdelmessih has some good blog posts on the vol smile & implied distributions. @SinclairEuan has a paper showing puts more expensive than calls generally

Matt, just to confirm put call parity is just on a single strike like was said above (if you find different vols on the same strike, which is common bc of financing assumptions or market width, you generally want to use the vol from the OTM option because it's tighter)

Right, and I was saying the market doesn't treat puts and call the same because a put one standard deviation OTM could be twice the price of a call one standard deviation OTM.

Yea totally. A volatility smile exists for plenty of reasons. There's a cap structure argument for it but I find the most useful reason --the world is net long. It's a one sided market of hedgers that clears at a price where risk capital is willing to supply liquidity

Convex negative dependency on global risk is: - an attractive asset - an unattractive liability Buyers happy to pay up for it Sellers demand more to take it on

yes, and least for the overall market, isn't thats why the vol premium exists and why calls must generally be "overpriced". Since the world is generally long stocks, puts are bid up much high than "fair value" and because of put/call parity calls must be more expensive too.