Recently, in a settled SEC enforcement action, a mutual fund manager allegedly used an option strategy, but the SEC believed it was more speculative than hedging. See http://www.sec.gov/litigation/admin/2012/33-9377.pdf.
The SEC focused on the fact that the prospectus only permitted options for hedging, instead, the SEC claimed option trading was used to speculate. The SEC cited that the amount of options purchased were significantly higher than one would see if the strategy was purely hedging. Moreover, the cost for these options transactions were a significant amount of the entire portfolio.
Obviously, the SEC is looking at fund trading. Although the SEC did not make a specific bright line as to difference between heding and speculation, this matter certainly provides some guidance moving forward.