On the 30 Jun 2026 chain, implied volatility is higher below the future than above it, so the smile leans
Each option price gives one implied volatility. A chain therefore gives a smile across strikes for each expiry, and several expiries stacked together give a surface. The smile is the shape across strikes, and the term structure is the shape across time. The chart shows the smile of the 30 Jun 2026 Nifty chain as priced on 10 Jun 2026. Implied volatility is higher on the strikes below the future, with a smaller lift on the strikes far above it.
SABR, the stochastic alpha beta rho model, describes the forward and its volatility with four inputs: alpha sets the level, beta sets how volatility moves with the forward, rho sets their correlation and nu sets the volatility of volatility. A fitted SABR reproduces one expiry's smile and gives a sensible shape between strikes, which is why it is used to quote and to interpolate.
Local volatility is a function of the index level and time that reproduces every option price on the surface. Its weakness is the dynamics. It implies that the smile moves in a way the market often does not, so a hedge built on it can be wrong once the index moves. The choice of model depends on the trade it serves.
Stay with the data. The chain gives implied volatility only at strikes that traded, so a curve between them is an interpolation, and the wings are the least reliable part. A fit to one settlement snapshot shows the shape at that moment, not a forecast. The smile and skew page sets out the measures.
Before you trade. Derivatives trading carries a high risk of loss. SEBI's study "Profitability of Individual Traders in the Equity Derivatives Segment (FY25 to FY26)" (August 2026) found that 87.7% of individual traders in equity F&O made net losses in FY26, with aggregate net losses of Rs 91,685 crore. Read the SEBI study