Who are the market participants for derivatives?

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• Hedgers: They trade in derivatives to protect their investments against potential price movements in the underlying securities and market risk. By assuming an opposite position in the derivatives market, they reduce/hedge their risk of price movements in the underlying securities.
• Speculators/Traders: They try to predict future price movements in the underlying securities and take positions in the derivatives market based on their analysis.
• Arbitrageurs: An arbitrage is a deal that generates profits by exploiting a price difference in a financial instrument in two different markets. Arbitrageurs simultaneously purchase and sell the same instrument in different markets, such as the equity and futures markets.