Term Structure of Volatility
The curve mapping implied volatility against time to expiration for at-the-money options on a single underlying. Typically upward-sloping (longer expirations price in more uncertainty), but inverts before known near-term events (earnings, FDA decisions) when near-term IV spikes above longer-term IV. The slope of the term structure is itself a tradeable signal: a steeply upward-sloping curve suggests near-term complacency relative to longer-term risk pricing; an inverted curve signals concentrated near-term anxiety.
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Related terms
American Option · Asian Option · Barrier Option · Basket Option · Butterfly Spread · Calendar Spread
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