Volatility Surface

Implied volatility is the function of both strike price and expiration time. For a given strike price, options with shorter time to maturity has higher implied volatility than options with longer maturities. Volatility Surface is a three-dimensional plot where the x-axis is the time of maturity, the y-axis is the implied volatility and the z-axis is the strike price of the underlying. Implied volatility surface simultaneously shows both the volatility smile and the term structure of volatility. It helps traders and investors to determine the slope of implied volatility.