Volatility Term Structure

IV pattern across expiration dates

What is Volatility Term Structure?

Volatility Term Structure The pattern of implied volatility across different expiration dates at a constant moneyness level (typically at-the-money). In normal markets, longer-dated options have higher IV (contango). When near-term IV exceeds longer-term IV (backwardation), it signals event risk or market stress.

Complete Definition

The pattern of implied volatility across different expiration dates at a constant moneyness level (typically at-the-money). In normal markets, longer-dated options have higher IV (contango). When near-term IV exceeds longer-term IV (backwardation), it signals event risk or market stress.