Does anyone do this? The CME's weather futures seem to have some VERY extreme price fluctuations. Looks like an interesting market to trade.
yes, I concure... but the price moves from $10 to $180 and back down to $10 in nice trends during the course of a year. I would think that liquidity is growing and so I wonder if anyone has tried this market. I don't know of any market that moves this much (without leverage).
Focus instead on weather sensitive markets, i.e. grains during the summer & livestock, orange juice and natural gas during the winter.
Exactly. I will predict that despite the current bearish fundamentals in the Beans, you will see the $10.80 highs of early 2004 taken out next Spring . . . and the spirited chant of "Beans in The Teens!!!" coming to a quote screen near you in the near future. This will be the Trade of 2006.
OK, here's a monthly bar chart for the CME's Osaka Average Temperature future's contract: I'm just starting to look at these, but DANG... they look beautiful!
Exactly. Right now, you are lucky to find 50-100 contracts trade in the Chicago or New York Hdd Futures with an open interest of 500 contracts. http://www.cme.com/trading/dta/del/product_list.html?ProductType=wea