Better late than never for traders of CME hurricane futures -- it now appears likely that Hurricane Ida will pass through the region in the western Gulf known to traders as the "Cat-in-a-Box."
Here's how this works:
Traders or firms with an economic stake in that area (e.g. oil rig evacuations in the face of a hurricane threat, etc) purchase a hurricane hedge that pays out a set amount of money if a hurricane passes within the predefined area.
According to the AER hCast application, there is now an 83% probability Ida will move into the Cat-in-a-Box region tomorrow morning, triggering payouts to traders who have hedged their risks in the western Gulf.
Money from hurricanes. Who'd of thunk?
