---
title: "Term structure"
description: "The term structure plots each expiry's at-the-money IV against its days to expiry: the volatility yield curve."
---

# Term structure

The term structure plots each expiry's at-the-money IV against its days to expiry: the volatility yield curve. One glance answers **whether the market is pricing a near-term event, and whether that premium is still building or already bleeding out.**

![Term structure pane with ATM IV per expiry on BTC](/learn/options/options-term-structure--hero.png)

## Add it to your chart

1. Open **Indicators** in the top bar.
2. Search for **Options Term Structure** and click it once. The curve renders in its own pane.

## Fullscreen

Use the legend's maximize button, or double-click the pane, to fill the chart with it; Esc restores the previous layout. Maximized, the curve gets denser ticks and larger text, so the front-expiry detail is easier to read.

## How to read it

- **Upward sloping (contango) is normal.** More time means more uncertainty, so longer expiries usually carry higher IV.
- **An inverted front is the signal.** When the nearest expiries trade above the back, the market is pricing a near-term event or is in stress right now.
- **The skew series adds direction.** With Show skew on, a second series plots each expiry's 25-delta risk reversal: put IV minus call IV, so positive means the downside is bid. It tells you whether the priced event is feared to the downside or chased to the upside.

## The math

ATM IV per expiry is read from that expiry's OTM-stitched smile, interpolated at its own forward; the [conventions page](/learn/options/concepts) covers stitching, forwards, and sign conventions. The optional skew series is the 25-delta risk reversal:

$$\mathrm{RR}_{25} = \mathrm{IV}_{25\Delta\,\mathrm{put}} - \mathrm{IV}_{25\Delta\,\mathrm{call}}$$

Positive means the downside is bid (puts pricier than calls); some platforms quote the opposite sign, so check the convention before comparing across venues.

## Settings

| Setting    | What it does                                                              | Default |
| ---------- | ------------------------------------------------------------------------- | ------- |
| Show skew  | Adds the per-expiry 25-delta risk reversal series                         | On      |
| Theme      | Color theme for the pane: series colors, fills, and accents (six choices) | Aurora  |
| Fill style | Area under the curves: none, soft, gradient, or by sign                   | Soft    |
| Refresh    | Poll cadence in seconds (30 to 600)                                       | 60      |

## Assumptions

- ATM IV per expiry comes from the same OTM-stitched smile the IV smile page draws, read at that expiry's own forward.
- Expiries are capped to the nearest 12 by days to expiry, so far-dated listings don't crush the tradeable front of the curve.
- The contango/backwardation label only flips outside a small deadband around flat (about half a vol point), so it does not chatter on noise between two nearly flat expiries.

## Trade around it, honestly

- **Inversion appearing means event premium is loading.** Check the calendar for what lands inside those front expiries; the curve often finds the date before the news does.
- **Inversion collapsing after the event is vol crush**, the classic post-event fade fuel.
- **Skeptical caveat**: the front point is hypersensitive within hours of expiry because its time denominator is tiny. Read the 0-2 day points with that in mind before calling a curve inverted.

{% hint style="info" %}
**Related**

The [IV smile](/learn/options/iv-smile) shows the strike dimension the term structure collapses, [Implied move](/learn/options/implied-move) turns ATM IV into an expected range, and the [Vol matrix](/learn/options/vol-matrix) tabulates the same structure in numbers.
{% endhint %}