Taking the Weather Option
Weather-contingent options are cheaper than other weather risk products and can be crafted to suit emissions allowance markets.
Weather-contingent options are cheaper than other weather risk products and can be crafted to suit emissions allowance markets.
Weather is a pivotal demand factor in energy consumption, but one that is difficult to predict and impossible to control. With weather-hedging tools available in the over-the-counter (OTC) markets for several years, the market has grown to $4.2 billion, with approximately 4,000 contracts traded in 2001, according to Pricewaterhouse-Coopers.