The Forward Factor compares the front month implied volatility to the forward volatility between two expiration dates.

1. Forward Volatility: Derived from term structure using variance additivity

σ_fwd = √[(σ_back² × T_back - σ_front² × T_front) / (T_back - T_front)]

2. Forward Factor: Measures how much front IV exceeds forward vol

FF = (σ_front / σ_fwd - 1) × 100%