convergence (redirected from Convergance)

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.

Notes:

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

See also: Cash Commodity, Derivative, Forward Contract, Futures Contract

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Convergence

The movement of the price of a futures contract toward the price of the underlying cash commodity. At the start, the contract price is usually higher because of time value. But as the contract nears expiration, and time value decreases, the futures price and the cash price converge.

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convergence

The process by which the futures price and the cash price of an underlying asset approach one another as delivery date nears. The futures and cash prices should be equal on the delivery date.