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Anyone here dabble with CWB?

Discussion in 'Business Fundamentals' started by TCLA, Jan 29, 2010.

  1. TCLA

    TCLA 2000 Club Member
    Messages: 2,699

    Dabble may not be the correct word, as it takes a decent sum of money to play the game. However, do any contractors here participate (or should I say gamble) with the Chicago Weather Brokerage (CWB)?

    It's not the "snow insurance" that has been somewhat discussed before......this is a hedge fund based on snow totals.

    My guess is salt suppliers are more willing (and have the $$$) to do this rather than contractors......but I can see the bigger (or ballsy) players showing interest, or even involved with this.

    Farmers,suppliers and investors have been betting on the weather for decades......just wondering if anyone in our industry is doing this, and how it turned out for them.
     
  2. Matson Snow

    Matson Snow PlowSite.com Addict
    Messages: 1,985

    Jim..This is really funny..I have been on the phone and web all day with these guys..Just another form of gambling....:laughing:...Im always interested in forms of investments....I think for a company your size it might be worth a look..To buy enough contracts to make it worth while..The small operator its a little pricey....
     
  3. Matson Snow

    Matson Snow PlowSite.com Addict
    Messages: 1,985

    Lets do a little hindsight...In September i could have bought a contract for $2000 dollars...I was gonna hedge that snow fall amounts were gonna be less than..I think it was 40.2" at Metro....That $2000 contract would be paying out,I believe near $10,000....As we got closer to winter the payouts were less..I think that same contract if you bought it in October dropped to about a $7800 on your $ 2000 dollar hedge....I know you can buy month contracts....So looking back so far...I should have Bought 10 contracts in September for less than 40.2"....Why didnt you tell me this winter was gonna be crummy Jim...:dizzy::laughing::laughing:
     
  4. TCLA

    TCLA 2000 Club Member
    Messages: 2,699

    You are a pretty big thinker and doer Todd.....I gota hand it to you. :salute:

    Yea.....the paper trading got me thinking too. You know damn well things will change once you drop your own cash down on it. :laughing:
     
  5. Matson Snow

    Matson Snow PlowSite.com Addict
    Messages: 1,985


    I Think for you guys its worth really looking at....But like you said ...Once you gotta pull your own wallet out, Things change...:eek:
     
  6. TCLA

    TCLA 2000 Club Member
    Messages: 2,699

    It is a numbers game and seems to make sense, and you can look at it this way......the loss on the hedge can be offset by the profits generated due to the greater snowfall.

    Reducing the variability of earnings by locking in on gains during periods of low snowfall seems to be not a bad bet. This is their hook....
     
  7. Matson Snow

    Matson Snow PlowSite.com Addict
    Messages: 1,985

    Bingo...That is the hook....It offsets the other way too....You hedge the low snow hedge,...And it only snows 38"...You would regain Some lost profits on your Per push people.....Now all we need is a crystal ball and we are all set....:nod: