What is a weather derivative, i.e. certificate?
A weather derivative is an option based on underlyings such as temperature, precipitation, wind etc. The weather data options are linked to is measured by independent national weather stations across Europe. The parameters for weather derivates are usually: Weather station, weather data (temperature, rain, snow), time frame (minimum 3 days, maximal 365 days), amount (e.g. x mm rain) payout conditions, maximum payout.
