As everyone knows, snowstorms like the one that socked the Northeast this past weekend are bad. They're a bitch to clean-up, slow retails sales, cause traffic accidents galore, and prompt mass cancellations of everything from airline flights to sporting events.
Except that, well, sometimes, snowstorms are good. Like, for instance, if you own a ski resort. Or if you're planning a winter carnival. Or if you're hosting the Olympic games.
If you're following along here, you'll notice an obvious opportunity for arbitrage. Some folks lose money when it snows too much, while others lose money when it doesn't snow enough, giving both sides of the question a clear incentive to hedge their bets.
Thanks to the fine folks at the Chicago Mercantile Exchange, they'll soon have that opportunity. Beginning Feb. 26, the exchange will open trading on monthly cumulative snowfall futures for Boston and New York.
But as innovative as all this sounds, the CME is actually quite behind the times here. British bookmaker William Hill has been taking punts on various snowfall related liabilities -- notably whether there would be a White Christmas -- for more than three decades.
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