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.

BREAKING DOWN '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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  1. What are some securities that have spot rates?

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  3. What are the differences between divergence and convergence?

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    Technical price confirmation comes in many different forms. The stock market is full of indicators, oscillators, patterns, ... Read Full Answer >>
  5. Can mutual funds invest in options and futures?

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