Series 3: 1.3.5.2. Speculation

1.3.5.2. Speculation

Like arbitrageurs, speculators have no interest in holding the asset they trade in but are only interested in the fluctuation of its price. Whereas arbitrage is a risk-free strategy of buying and selling the same product at the same time, speculation is an activity that accepts an increased risk to capture anticipated future gains. Speculators place a bet on the future price direction of an asset for resale or repurchase at a later date.

Perhaps an investor expects a bumper