Volatility smile
The difference in implied volatility across strikes on options over the same underlying.
How to read the number
The shape of the curve shows which move the market fears more: outer strikes are priced above what a plain model would suggest.
When the metric lies
A model that assumes one volatility for every strike systematically underprices the outer options, and those are exactly where a seller's losses arrive fastest.
Also known as: implied volatility smile