The principle of convergence suggests that option prices tend to approach the value of the underlying futures contract as the expiration date of the options approaches.

Question

Quizplus · Accepted Answer

The principle of convergence refers to the phenomenon where the price of a futures contract moves closer to the spot price of the underlying asset as the expiration date of the futures contract approaches. It does not directly relate to the relationship between option prices and the value of the underlying futures contracts.

The Principle of Convergence Suggests That Option Prices Tend to Approach