Unconventional Gambling: Placing Bets on the Weather
It's been said that the job of a meteorologist is an easy one; after all, he or she has a 50/50 chance of getting things right. Everyone knows the weather can be unpredictable, but did you know that placing bets on the weather is becoming a trend in many places? Whether a merchant will refund the purchase price of your flat-screen TV if it snows more than a foot on New Year's Day or another will have a half-off sale if the mercury climbs above 90 degrees in May, there are some fundamental rules here that everyone should understand prior to putting up a stake.
Of course, it isn't just the merchants offering up fun promotions that can be seen placing bets on the weather. Because the temperature outdoors plays a significant financial role in many industries due to the costs of heating and cooling, the Chicago Mercantile Exchange developed tradable futures back in 1999 that will essentially allow people to play the odds much as they would when purchasing stocks. Though there are plenty of ways to make money with these futures, the most common involves what are known as heating degree days (HDDs) and cooling degree days (CDDs). First of all, you will need to figure out what the average temperature should be for the day in history based upon your location. As an example, if it is generally 70 degrees in Toronto on June 13 and the temperature this June 13 was only 63, then that means the CDD is 7 and the HDD is zero because it is cooler than average, not warmer. Believe it or not, there are thousands of people worldwide who make predictions based upon these numbers - and some of them have actually cashed out quite nicely, too. Of course, like anything, there is risk involved. Just ask the meteorologists who are trained to predict the weather!