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Abstract: Option trading requires knowledge of two types of volatility: realized volatility, which is a measure of the underlying variability; and implied volatility, which gives the market price of the options. This chapter examines implied skewness and its sources, including credit, actual skewness of returns, put buying as static hedges, call buying as takeover hedging, and index skewness from implied correlation. Implied volatility dynamics are tricky to quantify and forecast. Implied volatilities move more slowly than realized volatilities, but implied volatilities have a term and strike structure that also needs to be accounted for. The most important implied volatility for a trader is the at-the-money level. Most of the implied volatility movement is a shift in the level of volatility. The slope and curvature of the implied curve are of diminishing variability. The chapter highlights the Black-Scholes paradigm to include skewness and kurtosis and provides several rules of thumb for comparing volatilities across time and underlying product.