Glossary

Helpful Glossary of Useful Terms

TERM DEFINITION
Atlantic Basin Corresponds to the Atlantic Ocean as the formation area for tropical cyclones.
Bid Price The price a buyer is willing to pay for a contract.
Binary Option A simple Yes/No option about the value of a proposition at a specified time in the future.
Buy

An options position.

Also known as a long position.

A contract that provides the purchaser the right to buy a contract at an agreed upon price (i.e. the strike price) at any time during the life of the contract (i.e. before the expiry time).

Cantor Clearinghouse

Cantor Clearinghouse is a sister company of the Cantor Exchange.

Cantor Clearinghouse, L.P., also known as "Cantor Clearinghouse", has been approved by the CFTC as a registered Derivative Clearing Organization (DCO).

Cantor Clearinghouse provides all clearing services to any and all contracts on the Cantor Exchange.

Please visit the Cantor Exchange website for more information about Cantor Clearinghouse.

Cantor Exchange

Cantor Exchange is a CFTC approved Designated Contract Market (DCM).

Cantor Exchange establishes the rules of fair trading, offers the electronic trading platform for matching buyers and sellers, and supervises the trading practices of all participants in the market.

Please visit the Cantor Exchange website for more information about the Cantor Exchange.

CFTC Commodity Futures Trading Commision.
Clearing The procedure through which all exchange contracts are settled accordingly through a clearinghouse.
CLOB Central Limit Order Book.
Closed Position Previously owned position that you have sold or that has settled and you no longer own.
Contract

A contract is an agreement between buyers with opposing positions in the market.

CONUS

Continental United States.

The contiguous U.S. (CONUS) consists of the 48 adjoining U.S. states plus Washington D.C. on the continent of North America.

This excludes the non-contiguous states of Alaska, Hawaii, and all off-shore U.S. territories and possessions such as include American Samoa, Guam, the Northern Mariana Islands, Puerto Rico, and the U.S. Virgin Islands.

Current Position You own a position in a proposition that will settle at some future date or time or based on some future outcome or event, or you can sell the position or otherwise enter a trade that offsets the position to exit the market prior to settlement.
Cyclone An atmospheric closed circulation rotating counter-clockwise in the Northern Hemisphere and clockwise in the Southern Hemisphere.
DCM Designated Contract Market, as set forth by the CFTC.
DCO

Derivatives Clearing Organization, as set forth by the CFTC.

Early Settlement

When a contract is settled any time prior to the expiration date.

Ending Net Worth The final value of your trading account at the End of Trading for a day.
Expiration, Expiry, Expiration Time The predetermined time at which a contract expires or closes. Please note, a contract may close before the designated expiry.
Eye The roughly circular area of comparatively light winds that encompasses the center of a severe tropical cyclone. The eye is either completely or partially surrounded by the eyewall cloud.
Final Settlement At the expiration of the contract or at a point of early settlement, the contract is settled and all open transaction positions are either paid out or not depending on the outcome.
First Landfall The First Landfall is the location the storm first crosses onto land. Please note, a storm may make landfall, then cross back into sea, and then make landfall again. In that event, if the subsequent landfall is 12 hours after the initial landfall, the subsequent landfall will also be considered to be a Qualifying Atlantic Landfall.
Good 'Til Cancelled

Also known as GTC.

An order type meaning that the order is open and available to be matched in the market until one of the following events occurs:

  • The order is filled
  • The order is cancelled
  • The contract reaches the expiry time
  • The contract is settled
Orders entered using the TradeWx website are automatically entered as GTC.
GTC See Good 'Til Cancelled.
Hurricanes

The name for a tropical cyclone with sustained winds of 74 miles per hour (65 knots) or greater in the North Atlantic Ocean, Caribbean Sea, Gulf of Mexico, and in the eastern North Pacific Ocean.

This same tropical cyclone is known as a typhoon in the western Pacific and a cyclone in the Indian Ocean.

Hurricane Season

The portion of the year having a relatively high incidence of hurricanes.

The hurricane season in the Atlantic Ocean, Caribbean Sea, and Gulf of Mexico runs from June 1 to November 30.

Immediate Or Cancel 

Also known as IOC.

An order type meaning that, if there is no matching order on the order book when the order is submitted, the order is cancelled right away and is not left sitting open on the order book.

In The Money

An options contract that, when settled, is worth $1 on the Exchange.

A zip code contract for which the next named storm makes landfall within a 75 mile radius from the centroid of the selected zip code. 

For example, let's say you purchased protection against the next named storm to make landfall landing in the 33101 zip code in Miami, FL. If the next named storm to make landfall does land within 75 miles of the centroid of the 33101 zip code, the contract is in the money and position holders will receive a payout at settlement.

Invest

Short for investigation area.

A designated area of disturbed weather that is being monitored for tropical cyclone development. Once a system has been designated as an invest, data collection and processing is initiated on a number of government and academic web sites.

The designation of a system as an invest does not correspond to any particular likelihood of development of the system into a tropical cyclone.

IOC Immediate Or Cancel.
Landfall The intersection of the surface center of a tropical cyclone (hurricane or tropical system) with a continental U.S. (see CONUS) coastline. This intersection is defined by the National Hurricane Center in storm analysis.
Major Hurricane A hurricane that is classified as Category 3 or higher.
Named Storms Each Tropical Storm and Hurricane is assigned a name. This excludes Tropical Depressions and Subtropical Storms.
NFA National Futures Association.
National Hurricane Center (NHC)

A branch of the Tropical Prediction Center.

The NHC is the office of the National Weather Service that is responsible for tracking and forecasting tropical cyclones over the North Atlantic, Caribbean, Gulf of Mexico, and the Eastern Pacific.

Please visit the NHC website for more information. 

National Oceanic and Atmospheric Association (NOAA)

A branch of the U.S. Department of Commerce.

NOAA is the parent organization of the National Weather Service. NOAA promotes global environmental stewardship, emphasizing atmospheric and marine resources.

Please visit the NOAA website for more information.

National Weather Service (NWS)

A primary branch of the National Oceanic and Atmospheric Administration.

NWS is responsible for all aspects of observing and forecasting atmospheric conditions and their consequences, includingsevere weather and flood warnings. 

Please visit the NWS website for more information.

Offer Price The price a seller is willing to accept for a contract.
Order A request by a Participant to buy or sell a contract with specified conditions (price, strike, expiry, etc.) on or subject to the rules of the exchange.
Order Type Either IOC or GTC.
Out Of The Money

An options contract that, when settled, is worth $0 on the Exchange.

A zip code contract when the next named storm makes landfall outside of the 75 mile radius from the centroid of the selected zip code.

For example, let's say you purchased protection against the next named storm to make landfall lands in the 28409 zip code in Wilmington, NC. If the next named storm to make landfall lands in the 70354 zip code in Galliano, LA, the contract is out of the money and position holders will not receive a payout at settlement. 

Participant

Refers to registered members of an exchange.

Any Person that has been granted, and continues to have, trading orivileges, or otherwise remains subject to the jurisdiction of an exchange under the exchange rules.

Position (Financial)

Refers to the amount of protection purchases in a selected zip code in a zip code contract.

Your collective set of positions make up your portfolio.

Position (Weather)

The location of the center of a tropical or subtropical cyclone obtained by reconnaissance aircraft penetration, satellite, radar, or synoptic data.

Potential Payout

The amount that will be paid to in-the-money position holders if the position turns out to be correct.

Premium The amount of money that is paid to purchase a position.
Pressure The exertion of force upon a surface by a fluid (e.g., the atmosphere) in contact with it.
Proposition

The future weather-related event for which Participants may take a position.

Quantity Refers to the number of contracts when placing a trade on an exchange.
Saffir-Simpson Scale

This scale classifies hurricanes based on their intensity, and is used to predict how damaging the hurricane will be to property.

Saffir-Simpson classifies hurricanes from a scale of 1 (minimal) to 5 (catastrophic).  

Sell

An options position.

Also known as a short position.

A contract that provides the purchaser the right to sell a contract at an agreed upon price (i.e. the strike price) at any time during the life of the contract (i.e. before the expiry time).

Settled position A position that is closed at or before expiration time.
Settlement When a contract is determined to be paid out or not.
Spaghetti Plots

Also known as a spaghetti chart, spaghetti diagram, or spaghetti model.

A method of viewing tropical cyclone data to visualize possible movements of a strom from its current position.

Subtropical Cyclone

A non-frontal low-pressure system that has characteristics of both tropical and extratropical cyclones.

Like tropical cyclones, subtropical cyclones are non-frontal, synoptic-scale cyclones that originate over tropical or subtropical waters, and have a closed surface wind circulation about a well-defined center. In addition, they have organized moderate to deep convection, but lack a central dense overcast.

Unlike tropical cyclones, subtropical cyclones derive a significant proportion of their energy from baroclinic sources, and are generally cold-core in the upper troposphere, often being associated with an upper-level low or trough. In comparison to tropical cyclones, these systems generally have a radius of maximum winds occurring relatively far from the center (usually greater than 60 nautical miles), and generally have a less symmetric wind field and distribution of convection.

Subtropical Storm A subtropical cyclone in which the maximum sustained surface wind speed (using the U.S. 1-minute average) is 34 kt (39 mph or 63 km/hr) or more.
Trading Day

Any day on which the relevant exchange is open and available for the trading of Contracts and the Clearinghouse is open and available for clearing of Contracts.

For Cantor Exchange users, please visit the Cantor Exchange website for more information about trading days.

Trading Hours

The hours during which the relevant exchange is regularly open for trading.

For Cantor Exchange users, please visit the Cantor Exchange website for more information about trading hours.

Tropical Depression A tropical cyclone in which the maximum sustained surface wind speed (using the U.S. 1-minute average) is 33 kt (38 mph or 62 km/hr) or less.
Tropical Feature A commonly used term to refer to an area of disturbed weather in the tropical basin that has some early tropical cyclone characteristics
Tropical Storm A tropical cyclone in which the maximum sustained surface winds are from 39 miles per hour (34 knots) to 73 miles per hour (63 knots). At this point, the system is given a name to identify and track it.
Tropical Storm Season See Hurricane Season.
TradeWx  A data and technology company that provides weather-related tools and information, including a trading interface to access exchange weather protection markets.