2. Trading the Weather
2
The IPCC identifies three major effects climate
change will have on temperature and
precipitation:
–Trend of warmer temperatures.
–Trend of more extremes.
–Trend of heavier precipitation.
3. Atmospheric CO2 Concentrations
from ice cores something to ponder!
3
According to NASA the evidence for rapid
climate change is persuasive so we need to get
used to it and understand the means in which
we can hedge and or trade this market.
4. About Weather Contracts
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– Wet and Dry periods.
– High and Low temperatures.
– Wind.
– Snow
Weather Contracts are a type of financial option
that involves paying a premium for a trigger over
a weather event which if triggered is paid
automatically.
5. What are Weather Contracts
5
• Weather Contracts are Options or Certificates over the weather.
• A Weather Contract is an over-the-counter financial product, which
allows you to receive an agreed amount if certain climatic events
occur during the term of your Weather Contract.
• The events are based on third party weather data for the Weather
Station and are chosen by you.
• If the chosen events do not occur, then the Weather Contract lapses
or expires without any payment. You will have paid the Premium
for the Weather Contract and received no payout.
• You can only take “long” positions. You profit when an agreed
weather event occurs and if the weather event does not occur then
you simply do not get any further payment.
• You are not liable to make any further payment after you have paid
the Premium Amount. This Premium amount is all you can loose.
6. How to trade the Weather
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• Look for a weather event of interest.
• Define the risk period.
• Log on to QUOTE PRO.
• Input the parameters of the trade.
• Analyse the data.
• If all good buy it.
• Wait for the event to unfold.
7. Our Trading Platform
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• Weather Data from regions within over 20
countries.
• Weather Indexes on specific strategies you are
looking at for analysis.
• QuotePro Pricer.
• Execution Platform and Account information.
• The ability to monitor contracts and payouts
when they occur.
9. Lets Look at Strategy
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• Check out the forecasts. Get on the BOMs
mailing list.
• Look for events of interest ie El Nino
• Two main types of strategies:
– Event driven contracts like rain days and heat days
over a risk period.
– Accumulative rain and temps like a wet hot
summer during January.
• In put the data analyse and then buy if all
looks good.
10. Education about trading the weather
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• Revise the educational “Flip Books” to make sure
understand the products.
• Read the Product Disclosure Document
• Read the Financial Services Guide and Terms of
Trade
• Complete Client Agreement Form
• Send it to us
– Client Service
– GPO Box 268
– Sydney NSW 2001
