147 NTU Management Review Vol. 31 No. 1 Apr. 2021 Appendix A CME Rainfall Index Binary Contracts Table A.1 CME Rainfall Index Binary Contracts Product Name CME Rainfall Index Binary Contracts Index Daily Rainfall Index is defined as the total rainfall recorded at a particular location between 12:01 A.M. and 12:00 midnight. Monthly Rainfall Index is defined as the sum of the Daily Rainfall Index for a calendar month. Seasonal Strip Rainfall Index is defined as the sum of the Daily Rainfall Index over a minimum of two, and a maximum of eight, consecutive calendar months. Contract Months Monthly: One calendar month in Mar. to Oct. Seasonal Strip: Two to eight calendar months. The first calendar month in the strip may be Mar. or later, and the last maybe Oct. or earlier. Contract Unit A binary option whose trading unit is $10,000. Price Quotation Being quoted in terms of the respective CME Rainfall Index. Each index point represents $100. Minimum Price Fluctuation 0.1 (one-tenth) index point (0.1 tick) = $10 Listing Cities 10 cities15 in the U.S. Exercise Prices Eligible exercise prices shall be at an interval of 0.1 (one-tenth) index point (e.g., 1.0, 1.1, 1.2, etc.) in a range of 0 to 20 index points for monthly options when 0 to 60 index points for seasonal strip options. Exercise A binary contract may be exercised by the buyer on any business day that the contract is traded. Assignment The buyer of a binary contract shall receive $10,000 if the respective CME Rainfall Index is equal to or greater than the exercise price, and shall receive $0 otherwise. The seller of a binary contract shall be obligated to pay $10,000 if the respective CME Rainfall Index is equal to or greater than the exercise price, and shall be obligated to pay $0 otherwise. Data Source MDA Information Systems Inc. (formerly “EarthSat”) 5 Listing cities and weather stations are Chicago O’Hare International Airport, Dallas-Fort Worth International Airport, Des Moines International Airport, Detroit Metro Airport, Jacksonville International Airport, Los Angeles Downtown USC Campus, New York LaGuardia Airport, Portland International Airport, and Raleigh/Durham International Airport.
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