The Product Design Of Temperature Index Futures In Our Country

As the impact of meteorological factors on the economy becomes more and more significant, the one for preventing the risks of the financial derivatives comes into being. Since the CME officially launched the temperature index futures in1997; more and more industries which are sensitive to weather have begun to pay close attention to it and participated in the temperature index futures trading. The market of temperature index futures shares almost three-quarters of the weather futures in global weather futures. As our weather sensitive industries pay more attention and improve their awareness, combining the natural environment and the current market conditions of our country, the need of industries is obvious. In this paper, with the economic impacting of climate temperature in depth and breadth, applying to our business which sensitive temperature, it designs a detailed temperature index futures-CDD contract which can trade in the Futures Exchange to buy and sell. By analyzing the product innovations and potential demand in the market, the article illustrates the necessity and feasibility of the temperature index futures further.This paper is divided into four parts. The first part talks about the design concept of temperature risk, the core characteristics of quantity risk, and anglicizing the risks and benefits of the products. The second part focuses on designing the contracts of the temperature index futures. Estimation the temperature index futures trading prices by time series model and Monte Carlo simulation. In the third part, we analyze the blank cause of temperature index futures market, the acceptance and innovative of the products, and aims to find the potential purchaser. Finally, analyzing the feasibility and advantage that implement the temperature index futures in China, the article puts forward several promotion strategies.