The empirical relation which exists between implied volatility and strike prices (it could be also observed between implied volatility and time). The Black- Scholes model assumes that volatility is flat (across strikes and time intervals). However, in real world, different strike options which have the same underlying and different expiration dates trade at different volatilities. It is said that the difference in strike prices causes a disparity in volatility, i.e., volatility skew.

In general, there are two types of volatility skew: volatility time skew and volatility strike skew.