Convergence

You’re a commodity trader. Congratulations on getting a degree at DePaul University and landing that plum job at the Chicago Mercantile Exchange. One of the first things that you’ll learn on the job is the concept of “convergence.”

This is an element of price movement where the front-month futures contract starts to move closer...or converge...with the spot price of the underlying commodity. This price movement is a natural shift as the expiration date of the contract approaches. The markets won't allow two different prices for the same product selling in the same place.

If that convergence didn’t occur, it would be the easiest arbitrage play in the history of man.