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Alberto protects himself from temperature risk using Weather Derivatives

Alberto protects himself from temperature risk using Weather Derivatives


Winter is the most complex time for Alberto, CEO of a company operating in the natural gas markets, which offers great opportunities but also involves a high level of risk. Indeed if temperatures during the winter months rise too much, there would be a decline in gas consumption by his clients, impacting directly on his business flows. Alberto decides to talk the problem through with Giulio, an old school friend who suggests contacting the Global Energy and Commodity Team. So Alberto calls to make an appointment for the following day with Carlo of the Global Energy and Commodity Team.

The two meet up and Carlo shows to Alberto all the available solutions for Global Energy and Commodity Team's counterparties. After performing an in-depth analysis of the situation, Alberto decides the Weather Derivatives are ideal for him. This specific type of derivative products, following the payment of an initial premium, allows holders to pay or receive amounts within limits that are fixed based by analysing temperatures within a chosen period. “The payments you make,” Carlo goes on, “will be covered by greater revenues from your client portfolio, while the payments you receive will offset losses from lower consumption of gas.”

The meeting solved Alberto’s problems. He now knows that he can count on a professional expert, and in fact a whole team of highly skilled specialists, who will always be available for him. By buying Weather Derivatives, Alberto consolidated his margins and covered his portfolio from “temperature risk”.


Find more about the product Weather Derivatives

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