Can a Single Derivative Contract Be Used for Both Hedging and Speculation?

Yes, a single derivative contract can be used for either hedging or speculation, depending on the trader's intent and existing exposure. The nature of the position is defined by the user's motive, not the instrument itself.

For instance, an airline buying a futures contract to lock in fuel prices is hedging. A trader with no exposure to fuel buying the same contract, betting that prices will rise, is speculating.

The contract is identical; the purpose dictates whether it's a hedge or a speculative bet.