What are the days of cooling?

Cooling Days is a term used in various places around the world to identify every day when the temperature rises above the standard level and the locals are starting to use air conditioning to cool the interiors of the building. In most situations, calculations for the degree of cooling are presented more in terms of Fahrenheit than Celsius. This is important for investors because the use of air conditioning in private and public buildings has an impact on the weather.

The arrival process on the day of cooling on that day monitors the basic pattern. The key to the process is the identification of the reference temperature, with 65 degrees Fahrenheit (18.34 degrees Celsius) often used as this standard. From there, the actual high and low temperatures are averaged at twenty -four hours. The benchmark temperature is deducted from the average temperature per day and leaves what is known as COODEN Ling or CDD. For example, if the average temperature for a given day is 75 degrees Fahrenheit (23.89 Celsius), soonIt would have a cooling grade 10 (or 5.5 if a Celsius scale is used).

This number becomes important for investors because the cumulative cooling days for a given month help to manage the value of the derivative contract for this month. Assuming that the entire thirty -day month had an average temperature of 75 degrees Fahrenheit (23.89 Celsius), this would be projected within thirty days with a cooling days of ten, while the values ​​of fahrenheite were used as a standard. The dollar value is assigned to the cumulative number representing the thirty -day period, allowing the total CDD to be determined in this month. This number is then multiplied by a fixed amount of the dollar. For example, thirty days of individual CDDs out of ten by Mean Kumulative total $ 3,000 in the US (USD). Assuming the value of the dollar assigned to each day is $ 25.00, that is, the Cooling Days for this month will occur at 7,500.00USD as a nominal value settlement for the weather contract in the month.

A similar approach is used during the cold months to determine the value of weather derivatives in the months when air conditioning is not commonly used. During these colder months, the calculation is referred to as the days of the heating level rather than the level of cooling. The idea of ​​both basic calculations is that consumers use energy sources to maintain a comfortable temperature. As the use increases, there is also a degree of days, which in turn increases the value of the weather derivative for this particular month.