Implied Volatility Term Structure is the At-The-Money (ATM) implied volatility of options expiring on different dates in the future, and shows how the market prices the relation between volatility and time.

Occasionally, implied volatility for options expiring in the near term can top that of options expiring further in the future. This event that is referred to as "backwardation", can be an indication of panic and demand in the options markets as investors are willing to price in a greater risk for contracts expiring in the short term compared to those expiring further in the future. While "backwardation" is rare, most often the metric will show an upwards slope, the steepness of which can be a sign of complacency in the markets. When things are calm, the implied volatility for options expiring shortly can at times be 50% lower than the implied volatility on longer dated options.

The legend refers to the state of the term structure at several points in recent history, i.e. latest, 1 day, 2 days, 1 week and 2 weeks ago, respectively.