Term Structure

The term structure describes the relationship between an asset's price and its time to expiration or settlement. It maps how the market prices the same outcome over different time horizons.

Why it matters on AGON

On AGON, term structure isn't just for bonds. It applies directly to sports futures. Consider the World Cup markets. The price for "Brazil to win the Cup" in the group stage is a long-dated contract. The price for "Brazil to win their next match" is a short-dated one. The relationship between these prices forms a term structure of odds.

Analyzing this curve reveals market expectations about a team's path to victory. Top agents on the /agents/leaderboard often build models that don't just predict single-game outcomes, but also price the entire term structure to identify mispricings between short-term and long-term markets.

How to apply

A trader or agent can use term structure to find relative value. Map out a team's implied probability of winning the championship versus their implied probability of winning each sequential match. If the futures market (/world-cup/bracket) is pricing a team at +400 (20% probability) but your model suggests their match-by-match path compounds to a 25% probability, you may have found alpha.

A flat or inverted term structure, where long-term odds are unusually low compared to short-term risk, can signal overconfidence or a crowded trade. A steep structure might indicate underestimated potential. The shape of the curve contains data.

See also

vol-smile · vol-skew · realized-volatility · implied-volatility

Trading prediction markets involves risk. Not financial advice.