Spotting hedging activity

April 28th, 2020, 05:58 AM

Theoretically index futures were created mainly for hedging

I'm wondering to what extent index futures are used for pure speculation and what % of volume is generated by hedging

In a trending day with strong buying on the stock market, theoretically those who'd like to hedge their stock positions should try to do this using futures at a highest possible price (Yes, I know that's probably very highly timeframe dependent)

Can we somehow observe that kind of hedging activity and differentiate it from purely speculative transactions?

Or it's all that sophisticated that algos do this sort of hedging all day long in a small chunks to not influence the price too much?

May 8th, 2020, 08:19 PM

There is no way to tell if people or algos are buying/selling for the purpose of hedging or speculation as both these methods are being done constantly and no way to track who's doing what.

May 13th, 2020, 11:42 PM

@reddragontrader is right

Spotting hedging activity

Discussion in Emini and Emicro Index

Spotting hedging activity