Weather Derivatives

Reducing the variability of margins caused by climate events.

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Product features

Weather derivatives are financial products that are closely linked to weather conditions. This product was created with the aim of reducing the variability of margins due to adverse weather events. Weather derivatives are customizable products: for example, if the temperature recorded in Milan in the winter period negatively affects revenues, through weather derivatives conditions can be managed more efficiently and risks reduced. Moreover, unlike other products, this solution allows to have a clear knowledge of economic exposure: the occurrence of certain weather conditions leads to a cash flow defined previously and limited to a maximum and a minimum. Weather derivatives, with a lower expenditure compared to traditional solutions, allow to protect oneself from risks that cannot be managed with other products.

 

Made to measure
Customized product according to the needs.
Controlled outlay
Certainty of what you are paying and cashing thanks to the maximum outlay and cash-in limit.
Convenience
Price lower than traditional solutions.

The main features are ticksizelimits and strike:

  • ticksize is the amount of money that is paid or received for each unitary movement of the chosen meteorological variable. To protect oneself against temperature variability, the ticksize will indicate the amount of money to be paid or received for the unitary temperature movement.
  • high and low limits have the function of creating a "corridor" of payments, setting a maximum outlay and collection.
  • strike is the value above which one pays or receives.

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