Convergence

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DEFINITION of 'Convergence'

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).

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RELATED FAQS
  1. What are the differences between divergence and convergence?

    "Convergence" generally means coming together, and "divergence" generally means moving apart. In the world of finance and ... Read Full Answer >>
  2. How do traders identify confirmation of prices on a chart?

    Technical price confirmation comes in many different forms. The stock market is full of indicators, oscillators, patterns, ... Read Full Answer >>
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