The following points explain the similarities between heding and
speculation-
- Both, hedgers and speculators trade on the exxhange and OTC
market
- Even though hedging is about reducing risk, companies often
look at the future price and take only 50%/ 70% of the position if
they will the narket will move in their favour, this makes heding
similar to speculation
- Hedges do get involved in transactions involving complex
strategies and tenuous relationships. They take a position in both
linear and nonlinear derivative products. This futher blurs the
line between hedgers and speculators.
Let me know in the comment section in case of any doubt.