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Weather derivative contract
A derivative whose value is indexed to climatic or geological variables.
These derivatives are used to hedge the risk associated with the negative or unforeseen impact of weather or geological conditions on an entity's business. For example, the Chicago Mercantile Exchange (CME) offers Weather Heating Degree Day (HDD) Futures, Weather Cooling Degree Day (CDD) Futures and Weather Cumulative Average Temperature (CAT) Futures.
Translations
Synonyms and variations
- Weather derivative
- Weather derivative instrument
- Weather derivative product