Do institutional investors trade / speculate on futures?

  1. does speculation play an important role in their investments / asset management ?

  2. ideally what percentage of their funds are dedicated to pure speculative trading alone ?

  1. Yes, they do. In fact most of the Hedge funds (In India its AIF) do speculate in the derivative segments. Their speculative process are invariable sophisticated.

  2. Hard to say, some funds running upto 100’s of Million are dedicated for speculation.

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can you elaborate more about sophisticated speculative process ?

Well, these are proprietary trading models usually involving quantitative process. Unfortunately its not accessible to all. This book should give you a basic perspective -