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Financial Derivatives: what are the three types of speculators ? how does each type of speculator...

Financial Derivatives:

what are the three types of speculators ? how does each type of speculator differ in terms of the way they trade or strategies they use?

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Answer #1

Types of speculators:

  • Bulls : these kinds of speculators expect the price to rise.So, these kinds of speculators always enter into a purchase transaction and sell the stock at a profit in case the prices rise without taking the actual delivery of stocks. The bull traders execute a price rigging strategy.
  • Bear: The bear is a pessimistic trader, he expects the prices to fall. If the prices really fall, then the trader earns the difference.
  • Stag: A stag is a cautious investor as they subscribe for the shares of companies which are not yet listed. To earn a profit if the shares are trading on a premium after they receive their allotment.

Speculators simply earn the difference in the prices of the shares and do not take actual delivery.

Strategies by trader used are:

Bulls adopt call option strategy and bear adopt bear strategies.

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