Convergence

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Related to Convergence zone: Intertropical Convergence Zone

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 periodicals archive ?
The two LPAs are inside the intertropical convergence zone , the Philippine Atmospheric, Geophysical, and Astronomical Services Administration (PAGASA) said.
The storm has no direct effect to the country, but the intertropical convergence zone over Mindanao will bring cloudy skies with scattered rains and thunderstorms over Zamboanga Peninsula, Northern Mindanao, Caraga, and Palawan.
During the period, rain-causing weather systems, such as thunderstorms, tropical cyclones and inter-tropical convergence zone will dominate the season bringing heavy rainfall and strong winds, it added.
An intertropical convergence zone affecting Palawan and Mindanao will bring cloudy skies with scattered rain and thunderstorms
While an intertropical convergence zone (ITCZ) is affecting Southern Luzon and the Visayas, the weather bureau said it was monitoring a tropical depression outside the Philippine area of responsibility (PAR) as of Tuesday morning.