Contango
A term-structure condition where longer-dated implied volatility is higher than near-term implied volatility.
Explanation
Contango is the more common volatility term structure in calm markets. It reflects the idea that uncertainty generally grows with time horizon. In options, contango affects relative value between front-month and back-month contracts and can influence calendar spread pricing.
Example
SPY 14-day ATM IV is 16%, while 90-day ATM IV is 20%, indicating contango.