Place your Hurricane Bets!!

[Yankeegirl]

Place your hurricane season bets

10:29 PM CDT on Tuesday, April 24, 2007

By Shern-Min Chow

Feeling lucky? Well forget Vegas for the newest game.

Investors with a nose for hurricanes could make a fortune. It's now possible to bet on the weather. Specifically on hurricanes.

An you can do it, all above board, at the Chicago Mercantile Exchange. As of March 12, you can bet on hurricane futures. Buyers make the call when, where and how badly a hurricane will hit.

They can put their money where their mouth is.

A broker will match that bet to someone wagering against you. No limit and the winner gets the money.

These futures markets are just ways to trade risk around

Hurricanes Katrina and Rita caused about $79 billion in damage that put insurance companies in dangerous waters.

A remedy? Hurricane futures.

Companies vulnerable to storms can bet against themselves and wager instead on companies that may profit from storms.

Losses from a storm can be offset by profits from a futures contract a hedge.

Theoretically, a vulnerable person could do the same.

“If I owned a house in Galveston or somewhere on the coast I could buy one of these contracts,” said Craig Pirrong, a professor for the University of Houston College of Business.

It's a very new idea

“I have not heard about this,” said 11 News meteorologists Mario Gomez.

Actually, weather futures have actually been around for about a decade where you can bet on temperature, rainfall or snowfall.

Meteorologists who make a living predicting the weather have reservations about the idea.

“Forecasting anything beyond four to seven days is a pretty risky proposition,” said Gomez.

Balancing risk makes perfect sense to an insurance agent.

Though not to a storm survivor.

“Oh my gosh that's why I don't go to Las Vegas,” said Linda Griffin.

There is no physical product. It's not like pork bellies you're just betting if there'll a hurricane.

Since this is just starting, contracts are limited to the first three storms of the season and five geographic regions.

Weather futures have actually been around for about a decade where you can bet on temperature, rainfall or snowfall.

[Hurricaneman]

I dont bet on hurricanes, because in a way your betting for death, which with me is a no no

[Derek Ortt]

already has been done for a couple of years and have made about 70-110% profits the last two seasons. Very easy to do and it is NOT betting on life and death. That is one of the single most absurred ideas I have ever heard. It is no different than betting on oil

see http://hurricanefutures.miami.edu this has been active for two seasons