Who are the different types of participants in the derivatives market?
There are three types of traders/participants in the derivative markets. They are hedgers, speculators and arbitrators. Hedgers manage the price risk of an asset by entering into a counter balancing futures contract. Speculators are lured into the futures by the reason of the opportunity to realize a profit on their anticipation of a price change. Arbitrators are in the business to take advantage of a discrepancy between prices in two different markets.
