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A comment on The Black-Scholes formula, explained (2019). Parent comment

Re:The Black-Scholes formula, explained (2019) by vardaro on Sunday April 11, 2021 @05:25PM (#26773582)
The vol smile is mostly a byproduct of greater demand for far OTM options to hedge tail risk, alongside more sellers for ATM options which depresses the middle portion of the curve. I am not sure why this is a problem
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Re:The Black-Scholes formula, explained (2019) by ivalm on Sunday April 11, 2021 @05:32PM (#26773638)
It's an example of how real life pricing deviates from Black-Scholes. At the same time the pricing is correct in a sense that tail risks are greater than would be expected from a random walk.
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