Introduction To Weather Derivatives
by Felix Carabello, Associate Director, Environmental Products, Chicago Mercantile Exchange
Weather: Risky Business
It is estimated that nearly 20% of the U.S. economy is directly affected by the weather, and that the profitability and revenues of virtually every industry – agriculture, energy, entertainment, construction, travel and others – depend to a great extent on the vagaries of temperature. […]
In a 1998 testimony to Congress, former commerce secretary William Daley stated, “Weather is not just an environmental issue; it is a major economic factor. At least $1 trillion of our economy is weather-sensitive.”
If there were only some way, to “Hedge that Bet” — against the ever present risk of Foul Weather.
No Worries — Where there’s a Market Risk, there’s always a Wall Street Way!