ForecastEx Settles Isaias Contracts in First Full Atlantic Hurricane Cycle

Interactive Brokers’ ForecastEx settled live wind-gust contracts after Hurricane Isaias, completing its first listing-to-settlement cycle for an Atlantic hurricane while trading remained confined to small retail positions.

ForecastEx opened contracts for 25 coastal locations on Oct. 7, including 19 in Florida. Trades clustered at six locations around landfall. The exchange had a full storm cycle in which to test trading and settlement, but activity remained limited in size.

Each contract covered a named storm and a coastal reference point. It resolved yes if a modeled three-second gust over land reached at least the set threshold within 10 kilometers of that point. That design lets a trader take a position on wind at a particular site instead of a season’s total storm count.

The listed thresholds began at 70 mph and increased in 10 mph steps. The broader product permits thresholds up to 200 mph in 10 mph increments and defines 163 coastal reference locations.

At 9:30 p.m. ET on Oct. 9 (1:30 a.m. UTC on Oct. 10), Isaias came ashore near Destin, Florida, with maximum sustained winds of 105 mph. Reask calculated a peak three-second gust of 144 mph at Fort Walton Beach for settlement.

The two wind figures describe different measures and places. The landfall figure captures sustained storm winds, while the Fort Walton Beach value represents a brief, modeled local gust. Reask reconstructs local winds using storm observations and a physical model; the settlement value was not a direct weather-station reading.

ForecastEx had offered live Atlantic storm contracts during Tropical Storm Edouard before Isaias. Isaias was the first Atlantic hurricane in the program to move from listing through settlement.

The weather contracts add a location-specific use case to the broader event-contract market. Property owners and insurers could use them to offset wind exposure at particular sites. The small retail trades during Isaias showed that the contracts could operate through a hurricane, but did not establish demand for large hedges.