What does speculative hedging mean?
Refers to the use of the futures market for speculation or hedging. Speculation refers to the behavior that investors earn profits by buying or selling futures contracts without actual needs. Compared with speculation, hedging is mainly a risk reduction behavior. Its purpose is to reduce the risk caused by price fluctuation by holding futures contracts and corresponding physical assets at the same time. Therefore, the motives and purposes of speculators and hedgers are quite different.