How hedgers may benefit from activities done by speculators


Problem

As indicated in the pre-recorded lecture, the vast majority of futures market participants are not interested in making or taking any deliveries (unlike the NG supplier in Part A or the end-user in Part B). Yet, some argue that those who are not interested in physical deliveries (let's call them "speculators") bring liquidity to the market and keep it active, which in return serves those who are interested in physical deliveries (let's call them "hedgers")

a) Provide an example of how hedgers may benefit from the activities done by speculators.

b) Provide an example of how hedgers may suffer from the activities done by speculators.

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Marketing Management: How hedgers may benefit from activities done by speculators
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