Who uses derivative securities?

Comparison criteriaHedging (Hedgers)SpeculatorsArbitrageurs
PurposePreventing price volatility risks
  • Place bets on future volatility in the opposite direction of hedger
  • Increased profits through financial leverage
  • Take advantage of market valuation different
  • Seeking risk-free profits
Risk appetiteRisk aversionAccept high risk 
  • Financial institutions
  • Non-financial institution
  • Investors
  • Government
  • Organization
  • Retail Investor
Usually a financial institution, business organization on the DS market
PositionUnderlying assets and Derivative Securities (concurrently)Derivative securities
  • Simultaneously buy and sell the same tool in two different markets
  • Simultaneously buy and sell on the spot and DS markets