Difference between speculation and gambling
Is there any difference between speculation and gambling?
Both speculation and gambling involves taking a position in the derivative segment without having any corresponding underlying. In the case of speculation, the open interest does not exceed the sum total of the underlying outstanding. However, in the case of gambling, the open interest exceeds the outstanding underlying at a macro level. Gambling is possible in the OTC segment, especially in credit derivatives. Gambling is not possible in an exchanged traded environment where the regulatory authorities ensure that the open interest never exceeds the sum total of the underlying outstanding at any point of time.