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CME Group Launches Weather Derivatives

Stock Market Betting On Weather and Climate Events

From heat waves to arctic cold outbreaks, weather often has a significant impact on business. CME Group’s temperature-based index futures and options provide the tools to help you manage weather-related risk. [1]

Since Weather products were created, we have continually listened to our customers and augmented the product line to meet the expanding needs of the growing weather risk management market. In the tables below, you can find the CME Globex codes for our temperature, frost, snowfall, rainfall and hurricane futures and options contracts. [2]

Financial tools that provide a means of transferring risk associated with adverse weather events


It is estimated that nearly 30 percent of the U.S. economy is directly affected by the weather. To enable businesses to hedge the risk they face from atypical weather conditions - summers and winters that are hotter or colder than normal - CME Group has developed Weather futures and options. These products are financial tools that provide a means of transferring risk associated with adverse weather events. They are index-based products geared to average seasonal and monthly weather in 35 cities around the world - 18 in the U.S., nine in Europe, six in Canada and two in Japan. CME Group also offers a select number of frost, hurricane and snowfall products.

How Weather is Traded at CME Group

Weather futures and options are all index-based products. Indexing makes it possible to trade weather in a way comparable to trading other index products such as stock indexes. The products are geared to different indexes. Weather products quantify weather in terms of how much temperatures, frost, hurricane damage or snowfall deviate from the monthly or seasonal average in a particular city/region. The variations are geared to specific indexes, with a dollar amount attached to each index point. Our hurricane products are geared to an index that measures how much damage a hurricane is likely to cause.

Quantifying weather in this way makes it a tradable commodity comparable to trading the varying values of stock indexes, currencies, interest rates and agricultural commodities. For example, summer weather is measured in terms of temperatures that exceed a base of 65 degrees Fahrenheit (18 degrees Celsius in Europe) and referenced to a Cooling Degree Day (CDD) Index. Winter weather is measured in terms of how much temperatures are below 65 degrees and referenced to a Heating Degree Day (HDD) Index. Frost and snowfall are similarly geared to Frost and Snowfall Indexes. [3]


Media Gallery



"Weather Products Homepage." Chicago Mercantile Exchange, CME Group (2021).
"Weather Futures and Options Codes." Chicago Mercantile Exchange, CME Group (2012).
"Weather Futures and Options." Chicago Mercantile Exchange, CME Group (2010).
Turvey, Calum G. "Weather derivatives and specific event risk." No. 371-2016-19252. (1999).
Turvey, Calum G. "Weather derivatives for specific event risks in agriculture." Applied Economic Perspectives and Policy 23.2 (2001): 333-351.

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