If neither hedgers nor speculators have private information, should both be expected to make zero profit?
October 16th, 2008
Derivatives asked:
If neither hedgers nor speculators have private information, should both be expected to make zero average profit from futures trading ? Why?
BARMORE
If neither hedgers nor speculators have private information, should both be expected to make zero average profit from futures trading ? Why?
BARMORE
An argument that speculators demand premium for providing liquidity and speculators demand premium for providing liquidity and speculators provide it think you could make an argument.
See hedgers simply want to remove their risk and speculater want to earn by movement in price