________ are likely to close their positions before the expiration date, while ________ are likely to make or take delivery.

Question

Quizplus · Accepted Answer

Speculators are participants in the futures market who aim to profit from price fluctuations by buying low and selling high or vice versa. They are likely to close their positions before the expiration date to avoid the cost of taking delivery. On the other hand, hedgers are market participants who use futures contracts to protect against adverse price movements in the underlying asset by locking in a fixed price. They may make or take delivery of the underlying asset, depending on their position in the market. Therefore, speculators are likely to close their positions before the expiration date, while hedgers are likely to make or take delivery.

________ Are Likely to Close Their Positions Before the Expiration