Define “Term Structure of Volatility” in Crypto Options

The term structure of volatility, also known as the volatility curve, is the relationship between the implied volatility of options and their time to expiration. It is plotted as a curve where the x-axis is time to expiration and the y-axis is implied volatility.

A rising curve (contango) means longer-dated options have higher IV, and a falling curve (backwardation) means shorter-dated options have higher IV.