Speculation means deliberately taking on risk in a market — without necessarily having an existing exposure to protect — based on a view of where a price will move, with the goal of profiting from that movement.
Speculation vs Hedging
Hedging aims to reduce existing risk; speculation aims to profit by deliberately taking on new risk. The same F&O contract can serve either purpose, depending on the trader’s intent and existing exposure.
Related Reading
See the full explanation with real examples in Why Do Futures and Options Exist? Hedging vs Speculation.