ClimaShield
  • 👋Welcome to Climashield
  • 🛣️Weather Derivative Flow
  • ☁️Weather Derivatives
    • 🔥Heating Degree Days (HDDs)
    • ❄️Cooling Degree Days (CDDs)
    • ‼️Examples
  • 💡How the number of HDDs or CDDs are predicted by the Derivative Providers?
  • 💲Pricing of Weather Derivatives
  • ℹ️Formula for Payout Structure (HDD Based)
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Formula for Payout Structure (HDD Based)

F = α * max(HDDs - K, 0) F = Financial Value associated with a weather derivative contract

α = Co-efficient that scales payout for each unit of HDD

HDDs = Denotes the cumulative Heating Degree Days for a specified time period

K = Threshold level that triggers the payout

Reference articles link:

  • Pricing Weather Derivatives :- https://www.hindawi.com/journals/amete/2015/837293/

  • Research Article on Blockchain based platform for Trading Weather Derivatives by Research Square :- https://assets.researchsquare.com/files/rs-1891762/v1_covered.pdf?c=1659107422

PreviousPricing of Weather Derivatives

Last updated 10 months ago

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