Glossary

Volatility Term Structure

By Rohan Fernandes, Founder · Updated 2026-08-22 · Educational reference, not investment advice

The volatility term structure is implied volatility plotted across expirations for one underlying. Upward-sloping (contango) is the calm resting state; inverted (backwardation) means near-term risk is being paid for hardest, which historically marks stress or a nearby event.

Single-stock term structure kinks around known events: the expiration spanning earnings carries a hump of event premium that later expirations lack, which is the calendar spread's raw material. At the index level, the VIX family (9-day, 30-day, 3-month, 6-month) reads the same curve for the whole market and feeds sizing regimes.

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