Products
Other Derivatives
Derivatives on weather, volatility, insurance and longevity risk, real estate and freight.
Introductory1 pagePractitioner4 pagesAdvanced1 page
1Other Derivatives
- IntroductoryWeather DerivativesCommon indexes include heating and cooling degree days (HDD and CDD), which add up temperature differences from a base, as well as rainfall and rainy days.
- PractitionerVolatility Products such as VIX FuturesThe VIX combines S&P 500 Index option prices, each weighted by one over the square of its strike price, and shows the expected size of moves over the next 30 days as an annual rate.
- PractitionerInsurance-Linked Securities and Cat BondsIn a catastrophe bond, the sponsor issues bonds through a special purpose vehicle (SPV), which invests the proceeds in low-risk collateral.
- AdvancedLongevity SwapsThe fund makes fixed payments and receives amounts equal to actual pensions, so it moves the cost of longer lives to the taker.
- PractitionerProperty DerivativesThe typical form is a swap that exchanges the total return of a property index (rental income plus price gains) for an interest rate.
- PractitionerFreight Derivatives (FFA)An FFA cash-settles only the difference between the contract rate and the average, over the settlement period, of a freight index the Baltic Exchange publishes daily, with no delivery of ships or cargo.