Convergence

What Does Convergence Mean?
A movement in the price of a futures contract toward the price of the underlying cash commodity. At the start, the contract price is higher because of the time value.

Investopedia explains Convergence
As a futures contract nears expiration, the futures price and the cash price converge to eventually become the same price (usually).

Related Terms

Cash Commodity
Derivative
Forward Contract
Futures Contract
More Related Terms

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