specific hedging role for options. The results suggest that weather derivative instruments with nonlinear pay-offs, such as …Weather derivatives represent an important financial innovation for risk management. As with the use of any derivatives … contract, the behaviour of the basis ultimately determines the net-hedged outcome. However, when using weather derivatives to …

supplier can buy weather derivatives to protect from volumetric risk due to unexpected weather conditions. However, contracts … can only be negotiated for weather variables measured at few selected locations. To hedge their specific risk, electricity …