term structure of volatility

The term structure of volatility refers to how expected price fluctuations in an asset change over different time horizons. For example, it describes whether the market expects more or less variability in an asset's price in the near term versus the longer term. This structure helps traders and investors understand how uncertainty evolves over time, guiding strategies for risk management and options pricing. Essentially, it’s a way to see how expected market volatility is shaped across various future periods, providing insight into market expectations and potential risk exposures.