Now we’re betting on the weather? Yes and what a lucrative and exciting market it is too. While we often make comments about the state of the weather and how it affects us, we may never stop to think if we can speculate on the weather. Now that has changed with the introduction of weather binary options by the Chicago Mercantile Exchange (CME).With the introduction of the Carvil Hurricane Index (CHI™ ) range of futures and options, retail financial traders now are able to speculate on the state of the weather for a financial return. Just like traditional binary options, weather binary options let the option holder earn a fixed payout if the option closes in the money. And just like traditional binaries, weather binary options are also offered as “Call” and “Put” options.
Foundation of Weather Binaries
While traditional binaries base their prices on the prices of underlying assets, the prices of weather binaries are based upon weather data collected from weather stations around the country such as the National Weather Service. For the CME range of weather binaries, their prices are based upon the CHI™. Developed from the work published by Lakshmi Kantha, the CHI™ seeks to measure the potential of damage that can be inflicted by an Atlantic hurricane. Using the maximum speed and radius of the hurricane, these storms in designated areas are tracked from their birth to their end. Apart from storms, some weather binaries also seek to track the temperature of major cities around the country.
Why Trade Weather Binaries?
Although weather binaries are only a recent creation, they do have their relevancy in today’s modern financial world. They came about as result of the need for such an instrument to help the losses that would have resulted from a devastating storm such as Hurricane Katrina or Hurricane Sandy. In other words, it provides those with hurricane exposure a simple method of hedging against potential losses.
Another reason for trading weather binaries is simply profits. It is just another avenue for which interested parties can use their intuition regarding the weather to profit with their skill.
Brokers Offering Weather Binaries
Given the fact that weather binaries were only a recent introduction to the financial world, there are currently only a handful of brokers who are offering this type of binaries to trade with. One such broker is Weathki.com. Weathki.com specializes in offering its clients the opportunity to profit from the predictions regarding the temperature of several major cities around the U.S. With the correct prediction, traders can earn up to 80% of the amount that they invested. So now here is a chance for you to make some money on an everyday phenomenon that most of us are familiar with.