Weather
A weather category in a prediction marketplace is a high-frequency, data-driven domain. Unlike sports, where outcomes are human-officiated, or stocks, where prices are exchange-determined, weather markets rely on specific **instrumented observations**.
Below is a professional description for a **Weather & Climate** category.
## Category: Meteorological Events & Climate
**Overview**
This category covers atmospheric conditions, including temperature, precipitation, and extreme weather events. These markets allow for speculative trading on local forecasts and provide essential hedging tools for businesses sensitive to climate (e.g., event planners, roofers, or agricultural traders).
### **1. Data Governance & Resolution**
* **The Golden Source:** All markets resolve using data from the **National Oceanic and Atmospheric Administration (NOAA)** or the **National Weather Service (NWS)** via official airport-based METAR (Meteorological Aerodrome Report) stations.
* **Station Specificity:** Each contract is tied to a specific station code (e.g., **KLAX** for Los Angeles Intl or **KLAS** for Las Vegas Harry Reid Intl).
* **Cleaning Policy:** If a primary data source is missing a report at the exact time of resolution, the market will utilize the nearest verified observation within a 60-minute window or revert to a backup provider like **Weather Underground (WU)** as specified in the individual contract.
### **2. Core Market Types**
* **Temperature (Highs/Lows):** Trades on whether the daily maximum or minimum temperature will fall within a specific range or cross a "Strike" threshold.
* *Example:* "Will the high at KLAS be geq **40°C** (104°F) on July 15th?"
* **Precipitation (Rain/Snow):** Binary markets on total accumulation over a 24-hour period.
* *Resolution:* Measured in increments of 0.01 inches. A "Trace" amount is settled as 0.00.
* **Severe Weather:** Probability-based markets on named storms, hurricane landfalls, or NWS-issued "Warning" statuses for specific counties.
### **3. Critical Settlement Clauses**
* **The "Midnight" Rule:** Daily markets utilize the "Meteorological Day," typically defined as 12:00 AM to 11:59 PM in the local time zone of the observation station.
* **Stat Corrections:** Markets settle based on the first "Official" summary published by the NWS. Subsequent revisions made more than 24 hours after the event (e.g., climate record audits) will not retroactively change the market outcome.
* **Incomplete Data:** If a weather station ceases reporting for more than 4 consecutive hours during a contract window, the market may be voided and all trades refunded at $0.50 per share.
## Example Contract: Precipitation Hedge
> **"Will there be > 0.1 inches of rain at JFK Airport tomorrow?"**
> * **Yes:** Resolves at $1.00 if the NWS daily summary for KJFK shows 0.11" or greater.
> * **No:** Resolves at $1.00 if the summary shows 0.10" or less (including "Trace").
>
### **Strategic Insight for Traders**
Weather markets are unique because they are driven by **Numerical Weather Prediction (NWP)** models like the **GFS** (Global Forecast System) and the **ECMWF** (European Center). Prices often move sharply following "Model Runs" which occur four times daily. Successful participants often monitor high-resolution, short-range models (like the **HRRR**) for intraday edge on precipitation and temperature shifts.
