VIX term structure compares implied volatility across horizons: 9-day, 30-day, 3-month, and 6-month. In calm markets the curve slopes upward (contango). When short-dated volatility prices above long-dated (backwardation), the market is paying up for immediate protection, which historically marks stress.
An upward-sloping curve, with VIX9D below VIX below VIX3M, is the resting state: uncertainty accumulates with time, so longer horizons carry more implied volatility. An inverted curve means traders are bidding hardest for the nearest-dated protection, which happens when stress is happening now rather than being merely imaginable later.
Options Scanner reduces the curve to three regimes:
Backwardation coincides with the richest option premium, which is exactly when premium selling pays most, and with the fattest tails, which is exactly when it hurts most. A hard veto would skip the paid periods; full size would ignore the tail. Scaling size down as the curve inverts keeps the discipline in the market while bounding how much a tail event can cost. The regime is surfaced in the daily briefing and per-ticker context panel so the size adjustment is visible before an order is built, not discovered afterward.
The VIX regime bands read the level of 30-day volatility; the term structure reads its shape across time. The two disagree in informative ways: a VIX of 22 with a steep upward curve describes priced-in caution, while the same 22 in backwardation describes active stress. Level sets the posture, shape adjusts the size.