On Thursday, August 28, CME will begin clearing trades in Hurricane Risk Landfall Options – HuRLOs. This innovative new product is offered by Weather Risk Solutions, LLC (WRS) and is part of CME’s Clearing 360 initiative.
HuRLOs are commodity options on which coastal region along the U.S. Atlantic or Gulf coast a hurricane will make landfall first. For example, the Dec 08 W2FBW HuRLO is automatically exercised and pays to the buyer if the second storm of hurricane-strength following the HuRLO product launch on August 28 makes landfall in Broward County, Florida.
In 2008, seventy-nine different HuRLOs will be available in two series. The first series corresponds to the first storm of hurricane-strength to make landfall on the U.S. Atlantic or Gulf coast, and the second series corresponds to the second such storm to make landfall. If two hurricanes make landfall, then additional series will be listed.
Within each series, there are seventy-eight different HuRLO options, each corresponding to the hurricane making landfall in a specified coastal county or region. In the northern areas, where hurricane landfall risk is low, the regions may be relatively large – for example, the entire coastline of New York and Connecticut. In areas where hurricane landfall risk is high, like south Florida, the regions may be as small as an individual county.
For more information:
For more information about HuRLOs, beginning on Friday, August 22, please see the WRS website at:
Or contact WRS at: 888-8HURLOS (888-848-7567)