Definition
VIX term structure compares near-term implied volatility with longer-dated implied volatility. A calm market usually prices near-term volatility below longer-term volatility. A stressed market often flattens or inverts the curve.
Why it matters
Equity drawdowns often become harder to manage when spot VIX rises, front-month volatility leads the curve and credit spreads stop confirming calm conditions.
How to use it
Use VIX term structure as a confirmation layer. It should not replace earnings, rates or liquidity analysis, but it helps identify when a normal pullback is becoming a volatility event.