# ATM volatility and flat volatility

Why do the implied volatility curve and the flat curve cross over the ATM volatility (at 100%) ?

Tx

• This question has no context. It is as if I showed you an apple and an orange and asked: Why ? – Quantuple May 4 '16 at 13:07
• I've edited : don't hesitate if you need more context – glork May 4 '16 at 13:48

## 1 Answer

Well... this is simply a picture to illustrate what is written in the text. It is not an absolute truth.

The author just chose 2 implied volatility smiles that share the same ATM volatility level for clarity. One exhibits negative skew (typical of equity markets) and the other one is flat (you'll never observe that in practice, although it is exactly what the theoretical Black-Scholes tends to predict).

• Ok because I was wondering from where it came ... Thank you ! Btw, do you have any ideas of why the implied volatility of OTM put is higher than the implied volatility of OTM Call. I can't figure out why ... – glork May 4 '16 at 13:52