Convergence

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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. More generally, convergence trading involves taking two related assets that have different prices with the expectation that prices will converge (the cheaper asset is purchased and the more expensive is sold short).

Convergence

The fact that the futures price and the spot price for a given asset approach one another as a futures contract on that asset approaches maturity. At maturity, the two prices should be equal. The existence of convergence is the basis for the theory that forward rates equal future spot rates, though this idea is more controversial.

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.
References in classic literature ?
They advanced the few hundred paces that separated the bridge from the Kaluga road, taking more than an hour to do so, and came out upon the square where the streets of the Transmoskva ward and the Kaluga road converge, and the prisoners jammed close together had to stand for some hours at that crossway.
He was now in German East Africa and it was his intention to skirt the mountains west of Kilimanjaro, whose rugged peaks he was quite willing to give a wide berth, and then swing eastward along the south side of the range to the railway that led to Tanga, for his experience among men suggested that it was toward this railroad that German troops would be likely to converge.
The four railways from Philadelphia and Washington, Harrisburg and Wheeling, which converge at Baltimore, whirled away the heterogeneous population to the four corners of the United States, and the city subsided into comparative tranquility.
Thither converges all the booty captured in the battles which the chiefs of the interior are continually fighting.