The line between hedging and speculation is critical, especially if a loss occurs. Although gains from speculative transactions are capital gains, losses are capital losses. Gains or losses arising from speculative transactions are treated as if they were 60 percent long-term and 40 percent short-term without regard to the actual holding period. Long-term capital losses can be used to offset long-term capital gains and, for individuals, up to $3,000 of ordinary income each year.
Harl, Neil E.
"Care Needed to Assure Hedging Result,"
Agricultural Law Digest: Vol. 12
, Article 1.
Available at: http://lib.dr.iastate.edu/aglawdigest/vol12/iss18/1