Veles Water Market Insight
Margining of futures contracts is often viewed as a highly complex subject.
Using the futures contracts based on the NQH2O index which are listed on the CME under the ticker H2O and HOO on Bloomberg we have some simple trades showing the margining cashflows and some background information.
These margining amounts are based on the CME margining system.
Water futures present a unique, cost-effective means to manage water price risk. One can use futures to hedge against price changes in the water market, which may otherwise have significant financial impact to a water user’s bottom line. This article will lay out the fundamental concepts involved in trading the contracts and lay the groundwork for successful risk hedging.
In 2020 the Nasdaq Veles California Water Index (NQH2O) was one of the top performing indexes globally and top performing asset class, finishing up the year at +116%.
Another poor March for Precipitation in the Central Valley. Can a March Miracle bring some relief?
Precipitation levels in the Central Valley currently sit well below the 20 year average for February.