On either, the buyer of the option pays a price to decide later to buy or sell b. The seller of the option must abide by the buyer's final decision. Speculators usually do not intend to take delivery of the actual asset 2. If there are many speculators, they tend to even out price fluctuations 4. Possible high risk and losses C. Problems in speculation 1.
Speculators buy derivatives to control large amounts of goods.
So you can control large amounts of oil b. But if the market changes unexpectedly, the options may be worthless 2. A speculator may also sell an option on something, thinking that the market won't reverse itself within a given time. He won't own or take possession of any of the product. A. A mutual fund has significant holdings in a foreign country 1.