A futures contract approaching expiration is often expected to move toward the cash price of its underlying asset. That relationship is strongest when the contract and spot quotation refer to comparable goods, locations, and settlement dates. Apparent convergence can be misleading when those details differ. For futures trading, the narrowing gap between the two prices is not a promise that a CFD linked to a futures contract will follow the visible spot chart. Five forces determine how that gap closes and what exposure remains along the way. Financing and Carry…
Read MoreFactors That Influence the Convergence of Futures and Spot Prices
