Indicator 14

VIX Term Structure

When short-term fear costs more than long-term fear, the market is in stress. Watch the flip.

Own pane · Daily · Any chart; data comes from VIX and VIX3M

The VIX term structure compares the price of near-term volatility to longer-dated volatility. Normally the far month costs more. When the front month costs more, the curve is inverted and the market is paying up for protection right now, which is a stress state rather than an opinion about next quarter.

What it shows

One line: VIX3M divided by VIX, the shape of the volatility curve.
Zones: comfortable contango, the flat danger strip, and backwardation (spot fear above three-month fear).
A stress trigger when the curve inverts decisively, with markers and alerts.
An alert on the flip back to contango, the classic tension-release read.

How it reads the market

In a normal market, longer-dated volatility costs more than spot. When that inverts, hedgers are paying up for protection right now, which historically marks stress that exhausts rather than trends. The flip back out of inversion is the other half of the story.

Settings

Setting	Default	What it does
Symbols	VIX3M / VIX	Remappable if your feed names them differently.
Zone bounds	1.00 and 0.95	Where flat ends and deep backwardation starts.
VIX floor	25	The mild-inversion trigger also requires an elevated VIX.

Everything is an input: colors, thresholds and time windows adjust from the indicator's settings panel, no code needed.

Built-in alerts

Stress trigger on
Curve back in contango

Set them once from TradingView's alert dialog and get notified on your phone, no chart-watching required.

Comes with the membership

The whole indicator suite is included with the paid plan, $20/month or $200/year. Subscribe, submit your TradingView username, and the scripts land in your TradingView library.

Get full access

How to add it to your chart

Request access above with your TradingView username (one request covers the whole suite).
We grant it on TradingView, usually within 24 hours; TradingView notifies you.
On your chart, open Indicators → Invite-only scripts and add VIX Term Structure.

When to use it, and when not to

It earns its place when

You want to know whether fear is immediate or structural.
You trade volatility products and need to know which way the roll is working.
You are looking for confirmation that a selloff has reached the panic stage.

Leave it off the chart when

You are trading the next hour. The curve moves on a daily cadence.
There is a known event on the calendar. A Fed meeting or an election can invert the front for reasons that have nothing to do with market stress.
You want to time the bottom. Inversions have lasted from one day to two months.

Common questions

What does an inverted VIX curve mean?

That near-term volatility costs more than longer-dated. Traders are paying a premium for protection now rather than later. It is the volatility market's way of saying the pain is immediate, and it rarely persists for long.

What is contango and backwardation in the VIX?

Contango is the normal state: further-out months cost more, because uncertainty grows with time. Backwardation is the inversion, and it shows up in almost every serious selloff. The shift between them is more informative than either level.

Does an inversion mean the bottom is in?

It means the market has reached the stage where protection is being bought at any price. That stage usually coincides with the later part of a selloff. Usually is not always, and the inversion in March 2020 lasted weeks.

How does this relate to the VIX level itself?

They can disagree, and the disagreement is the useful part. A high VIX with a normal curve is elevated but orderly. A moderate VIX with an inverted curve says something is breaking under the surface.