Extreme Weather Drives Surge in Weather Derivatives Trading
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Trading in weather derivatives has surged on major exchanges as climate change leads to more extreme weather events.
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Energy companies, hedge funds, and commodity traders are using weather derivatives to protect against or profit from extreme weather.
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CME Group has seen a 4x increase in open interest in weather futures and options in 2022 versus 2021.
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Climate change and energy supply concerns are driving increased demand for weather derivatives.
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Hedge funds like Citadel are getting more involved in weather derivatives, seeing themselves as "risk warehouses."