Q. Describe how derivatives (forward contracts, futures, options and swaps) can be used to hedge risk associated with weather and global warming.
A. Weather derivatives are financial instruments that can be used by organizations or individuals as part of a risk management strategy to reduce risk associated with adverse or unexpected weather conditions. The difference from other derivatives is that the underlying asset (rain/temperature/snow) has no direct value to price the weather derivative. Farmers can use weather derivatives to hedge against poor harvests caused by drought or frost; theme parks may want to insure against rainy weekends during peak summer seasons; and gas and power companies may use heating degree days (HDD) or cooling degree days (CDD) contracts to smooth earnings.
Heating degree days are one of the most common types of weather derivative. Typical terms for an HDD contract could be: for the November to March period, for each day where the temperature falls below 18 degrees Celsius keep a cumulative count. Depending upon whether the option is a put option or a call option, pay out a set amount per heating degree day that the actual count differs from the strike.
The first weather derivative deal was in July 1996 when Aquila Energy structured a dual-commodity hedge for Consolidated Edison Co. The transaction involved ConEd's purchase of electric power from Aquila for the month of August. The price of the power was agreed to, but a weather clause was imbedded into the contract. This clause stipulated that Aquila would pay ConEd a rebate if August turned out to be cooler than expected. The measurement of this was referenced to Cooling Degree Days measured at New York City's Central Park weather station. If total CDDs were from 0 to 10% below the expected 320, the company received no discount to the power price, but if total CDDs were 11 to 20% below normal, Con Ed would receive a $16,000 discount. Other discounted levels were worked in for even greater departures from normal.
After that humble beginning, weather derivatives slowly began trading over-the-counter in 1997. As the market for these products grew, the Chicago Mercantile Exchange introduced the first exchange-traded weather futures contracts (and corresponding options), in 1999. The CME currently trades weather derivative contracts for 18 cities in the United States, nine in Europe, six in Canada and two in Japan. Most of these contracts track cooling degree days or heating degree days, but recent additions track frost days in the Netherlands and monthly/seasonal snowfall in Boston and New York. A major early pioneer in weather derivatives was Enron Corporation, through its EnronOnline unit.
Climetrix® Weather Derivative System Launches Seamless Integration With TFS White Board and YellowJacket Software's YJ Weather
Newark, Calif. â July 17, 2006 â Risk Management Solutions (RMS), the worldâs leading provider of products and services for the management of natural hazard risk, today released version 5.1 of its Climetrix® weather derivatives trading and portfolio risk management system. This release provides an automated, direct link between Climetrix and the two most important sources of over-the-counter (OTC) weather market data: TFS White Board and YellowJacket Softwareâs YJ Weather. Climetrix version 5.1 also includes expanded option pricing functionality that automatically identifies the most valuable OTC trades available in the market.
The features added to version 5.1 provide further examples of how Climetrix automates processes that add significant value to a weather trading desk. The new functionality included in Climetrix 5.1 saves traders from performing time-consuming deal entry and also provides automatic notification of any potentially valuable deals posted to TFS White Board or YJ Weather.
Jeff Hamlin, director of Weather Risk Solutions at RMS, comments, âBy directly linking Climetrix with the TFS White Board and YellowJacketâs YJ Weather, our clients can instantly price virtually all weather contracts quoted in the OTC market. Details of these OTC markets are automatically loaded into Climetrix and then updated on a real-time basis so traders can spend less time on deal entry and more time trading.â
Climetrix version 5.1 also includes expanded option pricing functionality that instantly calculates the value of any new OTC market relative to recently traded or recently quoted values. This new functionality ranks all existing OTC option markets according to value, allowing clients to focus on the most valuable opportunities available in the OTC market.
More information about Climetrix can be accessed at: http://www.climetrix.com. Climetrix provides integrated access to all of the data, pricing tools, and portfolio management capabilities that are needed to participate successfully in the weather derivatives market.
http://www.marketwatch.com/news/story/growing-futures-market-lets-businesses/story.aspx?guid=%7B40213F1C-4108-4464-859B-47436F68649B%7D
http://www.ubs.com/1/e/media_overview/media_emea/mediareleases?newsId=117789
http://www.indexuniverse.com/index.php?option=com_content&view=article&id=1044&Itemid=38
What kind of job will i be working in if i were to finish my degree in Information Science and technology?
Q. IST is a really diverse major I'm not really sure what kind of job will be i be working with this major in the future so I'm just curious.
some people call it IT or IST
A. Colleges and Universities use a variety of names to describe their offerings. The best way to figure out what the major is really about is to look at the courses that make up the course listing for a given major. If it has lots of programming courses this will be a major in Computer Science (CS) and you will be trained to do software development, web programming, embedded systems programming and perhaps some robotics.
If it has many general management courses and very little in the way of technical computer courses then it is probably a management of Information Systems (MIS) major thet will prpare you to manage an IT team, projects and people.
It is has more technical courses in systems administration, network design, and computing security but few programming courses it is probably a Computer Information Systems (CIS) or other similar degree. The CIS is what I have. Most likely the IT or IST degree you mentioned is in this area. Here are just a few of the jobs you would expect find handled by people with that training:
Computer Technician - Works on computer hardware at user location or in service center. (entry level IT Job)
Service Center Coordinator - Schedules the repair of user community computers, orders spare parts, schedules staff, establishes priorities, maintains loaner laptops and non-US laptops for travel outside of US.
Help Desk Staff - answer questions and resolve problems for the user community. (entry level IT Job - Tier 1 support)
Storage Administrator - in charge of mass storage servers and devices.
Network Administrator - Works on routers, switches, hubs, cables, load balancers and all the other hardware that handles LAN and WAN network traffic. Also, may be responsible for IP phone service.
Systems Administrator or Systems Engineer- Works with servers, laptops and desktop computers to keep them free of problems and secure the data they contain. Responsible for Security group creation and memberships, server patching, anti-virus protection updates, password changes and any automated mechanisms that make these changes. These positions may be divided into server and desktop teams. Tier 2 support.
Enterprise Administrator - Handles Enterprise support and design issues. Tier 3 support.
Active Directory Administrator - Designs and administers Active Directory infrastructure, AD policies, access permissions, roles, group policies, separation of duties.
Exchange and Messaging Administrator - maintains mail systems servers, other mail related devices and the company messaging infrastructure.
Backup Administrator - Maintains backup devices and determines backup strategies so data that was deleted accidentally or intentionally can be recovered. Design and control how and when data is backed up, where the backups are stored and how long the backups are retained. They will test to be sure backups are valid and usable.
Disaster Recovery Specialist - Plans for disaster events so the company data and infrastructure can be brought back online as quickly as possible after a fire, flood, earthquake, terrorism or other disaster event. Plans for failover of services to alternate locations, if the primary location is not available.
Database Administrator - Maintains the company databases which may include customer and sales records, billing information, inventory and other data.
Computing Security Specialist - A company's biggest asset is its data and the Computing Security Specialist will work to try to keep that data protected from loss. They may be dealing with and defending against viruses, hoaxes, malware, keyloggers, phishing attacks, internal attacks and domestic and foreign intrusion. Develops monitoring and interception systems, filters and strategies and works with appropriate government agencies.
Corporate IT Acquisition Specialist - Works with acquired outside companies to establish migration into the corporate computing infrastructure.
Data Center Administrator - Maintains the data center facilities where the company's servers and other devices reside. They are responsible for physical security and may review badge reader and camera information to be sure that only individuals with proper access are getting close to the company's servers and other critical devices. Also, maintain backup power devices (UPS or generators), climate control equipment, fire suppression equipment, establish access policies, etc.
Best Wishes!
Asset Management software question?
Q. I downloaded a free trial for IT asset management software from Desk Center USA and found that in my business people were using illegal software. Can I get into trouble in my business because of what people are doing and what are the penalties?
A. if that came the the knowledge of the authorities then no doubt you have a problem, it also depends on where the illegal software is installed, i.e. company owned machines or the personal laptops of some users. Penalties vary depending on where you are, usually they start by forcing you legalize all "pirated" copies, otherwise you would be getting heavy fines if not something more serious even.
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