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HEDGESTREET'S HURRICANE MARKET FORECASTING
SEASONAL STORM DAMAGE WILL EXCEED $1 BILLION
SAN MATEO, CA, September 20, 2006 -- HedgeStreet, the first regulated U.S. market to offer trading on the estimated economic impact of hurricanes and tropical storms, announced today that its seasonal Hurricane market is currently forecasting a 55% chance that damage from all Atlantic tropical storms will exceed $1 billion in the United States.
Russell Andersson, Vice President of Instrument Origination and a Co-Founder of HedgeStreet said the brisk trading in Hurricane Ernesto contracts and the continued interest in the seasonal hurricane contract validates the concept of these markets.
HedgeStreet recently settled its first storm-specific contract on Ernesto, which caused an estimated $245 million in damage according to the Insurance Services Office (ISO).
"HedgeStreet believes that as these markets mature, in future years they will be valued for their predictive ability by first responders, insurers, government agencies and the news media, among others," said Andersson. "In addition, we saw numerous traders take significant profits from their positions on Hurricane Ernesto. In one contract, 48% of positions indicated that Ernesto's damages would exceed $100 million, so many traders doubled their initial investment."
HedgeStreet, the nation's first government-regulated online retail market for trading binary and futures contracts, began offering trading in Hurricane contracts last month. Trading in Ernesto contracts began on August 28 and settled on September 18.
"This has been a relatively inactive hurricane season in the United States, yet we have experienced significant interest and trading in our initial hurricane market listings. We will be applying this experience as we launch more innovative trading products in the weeks and months ahead," Andersson added.
As of the close of trading on Wednesday, September 20, HedgeStreet's full-season Hurricane market is forecasting:
- 55 % chance that seasonal damage will be greater than $1 billion.
- 15 % chance that seasonal damage will be greater than $10 billion.
- 8 % chance that seasonal damage will be greater than $25 billion.
HedgeStreet is the United States' first Internet based exchange where both retail and institutional traders can simply register and fund their accounts online and easily begin trading a variety of products including Hurricanes, Real Estate, Oil, Gold, Silver, Gasoline and Currencies.
Detailed information is available on www.hedgestreet.com. (For up-to-date probabilities in the HedgeStreet Hurricane markets see: http://www.hedgestreet.com/howto/hurricane/)
About HedgeStreet
HedgeStreet Inc. is the only U.S. based person-to-person market that lets online investors trade innovative financial instruments based on economic events and price movements. HedgeStreet offers its members online futures trading, online currency trading and online commodity trading. A designated contract market (DCM) and a registered derivatives clearing organization (DCO), HedgeStreet is subject to regulatory oversight by the Commodity Futures Trading Commission (CFTC). For more information, visit www.hedgestreet.com.
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