Weather Risk Solutions (WRS) has opened trading for the 2009 hurricane season in hurricane risk landfall options (HuRLOs). These instruments are designed to allow eligible investors and businesses to hedge against the financial risks of hurricane landfalls.

HuRLOs are structured as call options on weather and where a hurricane will make first landfall on the US Atlantic and Gulf coasts. It trades on an internet-based electronic platform operated by WRS.

All HuRLO transactions are cleared by CME Clearing, a US federally regulated derivatives clearing organisation. Every HuRLO's premium is paid fully on execution of each trade and is aggregated by CME Clearing House into mutualised risk pools.

"HuRLOs are designed to complement insurance by providing participants with a simple method of hedging against the financial risks from hurricanes," commented Kenneth Horowitz, founder of WRS.

HuRLOs do not need to find a seller to take the other side of the option purchase. Insurance and re-insurance companies may also use HuRLOs to hedge exposure."

At launch 79 different HuRLOs will be available in two options series. Seventy-eight HuRLOs in each series correspond to a hurricane making first landfall in a specified coastal county or region and one HuRLO in each series, called the 'no landfall' HuRLO, represents the event that no next hurricane makes first landfall in the enumerated coastal counties or regions for the rest of this hurricane season.