Location Panels (main screen)

The large location panels on the left and right side of the main screen are very important elements of the WeatherMage trader's arsenal. These can be thought of as a watchlist of short-term trading opportunities in the supported cities.

Main Screen Side Panels

Each panel can be divided into three sections that provide information for each market:

A) MARKET DEVIATION FROM AUGMENTED AVERAGE

The "augmented average" is an important concept necessary for trading weather derivatives. It starts simply with the unbiased average of the number of HDDs, CDDs, or CATs for the contract period. This number will not change before the contract period, even though the market may trade much above or below it.

As we move into the contract period, the this average is "augmented" daily by updating it with the actual degree days that occur. Therefore, as trading moves in time into the contract period, the augmented average will start changing (this concept of augmented averages will be explained in more detail later).

Each small colored horizontal bar next to the location market represents where that respective market is trading relative to its augmented average. When the bar is on the right of the center, this means that this market is currently trading above its augmented, and the opposite if the bar is on the left.

This information is very important as it shows how the market is expecting that locations' weather will unfold. At the end of the contract period, all trades in that market will be settled based on what the augmented average reads on the last day.

B) POSITION DELTA

A trader's position delta in any particular weather market is defined in the same way as any other market. Delta is the what the portfolio will gain or lose if that location's market were to move up one degree day.

Example: Trader A's delta in Chicago HDDs is 10. This means that if the Chicago HDD market moved up 100 degree days, A's unrealized PL will increase by 1000.

The delta is color coded for easy access. A yellow bar means that the delta is positive, while purple means that it is negative. The numeric delta figure is presented directly beside this color coded bar.

C) UNREALIZED LOCATION MARKET PL

This area shows the unrealized PL for that location's market. From this the trader can easily see how their position is performing, and decide whether or not any further action should be taken.

If a trader has no current position in a market, then B) and C) will appear blank.