The cornerstones of the exchange-traded derivatives market are the market makers (or dealers) and the speculators, both of whom typically own memberships on the exchange.4 The market makers stand ready to buy at one price and sell at a higher price. With standardization of terms and an active market, market makers are often able to buy and sell almost simultaneously at different prices, locking in small, short-term profits—a process commonly known as scalping. In some cases, however, they are unable to do so, thereby forcing them to either hold exposed positions or find other parties with whom they can trade and thus lay off (get rid of) the risk. This is when speculators come in. Although speculators are market participants who are willing to take risks, it is important to understand that being a speculator does not mean the reckless assumption of risk. Although speculators will take large losses at times, good speculators manage those risks by watching their exposures, absorbing market information, and observing the flow of orders in such a manner that they are able to survive and profit. Often, speculators will hedge their risks when they become uncomfortable.