As you get quotes and view summaries for contracts, you will encounter the term Weather Index. The Weather Index is a single number that is used to determine the payout of a contract. For Basic Contracts, the Weather Index is the total number of hot, cold, rainy, or dry days that occur during your contract period. The Weather Index is calculated by applying a simple mathematical Operation to the Daily Values. There are four choices for this operation. They are:

Sum:
When "Sum" is chosen as the Operation, the Weather Index is the sum of all the Daily Values. In some contract types (such as Rainy Day, Cold Day or Snow Day contracts) this means we add up the total number of days that the temperature crosses the threshold you select (such as 0.25 inches or 20 degrees). That number is the Weather Index.

In other contract types (such as Dry Season, or Cold Season), instead of calculating the sum of all days, the Weather Index is the total number of inches (for precipitation or snow) or degrees throughout the entire contract period. This type of contract is particularly helpful for those in the agricultural industry or other industries whose weather sensitivity spans across multiple days.

Average:
When "Average" is chosen as the Operation, the Weather Index is the average of all of the Daily Values. For example, the Weather Index might be the average amount by which the daily maximum temperature exceeds 60°, or the average daily rainfall during the contract period.

Maximum:
When "Maximum" is chosen as the Operation, the Weather Index is the maximum of all of the Daily Values. For example, the Weather Index might be the largest amount that the daily minimum temperature goes below 32°, or the largest amount of rainfall in a single day during the contract period.

Minimum:
When "Minimum" is chosen as the Operation, the Weather Index is the minimum of all of the Daily Values. For example, the Weather Index might be the smallest amount by which the daily maximum temperature exceeds 40°, or the smallest amount of rainfall in a single day during the contract period. If any of the Daily Values are 0 and the minimum operation is chosen, the Weather Index will be 0 as well.
Note that "Sum" is the only permitted operation for contracts whose Daily Values are always all 1's and 0's (See the Daily Values section for more).

Examples:

To show how different choices for the Daily Values and the Operation result in different values for the Weather Index, here are a few examples: Let's consider a five day contract based on daily average temperature, with a Daily Value Threshold of 60°, where the measurements recorded during the contract dates were 53°, 58°, 60°, 64°, and 55°.

Daily Value: 1 if measurement above threshold, 0 if below .
Operation: Sum.
In this case, the Daily Values are 1 if the temperature is over 60°, and 0 otherwise. The Daily Values would then be 0,0,0,1,0. The Weather Index is the sum of the Daily Values, or 1.

Daily Value: 1 if measurement at or below threshold, 0 if above .
Operation: Sum.
In this case, the Daily Values are 1 if the temperature is equal to or below 60°, and 0 otherwise. The Daily Values would then be 1,1,1,0,1. The Weather Index is the sum of the Daily Values, or 4.

Daily Value: Measurement above threshold.
Operation: Average
In this case, the Daily Values are the amount by which the measurements exceed 60°. If a measurement is below 60°, its daily value is 0. The Daily Values would then be 0,0,0,4,0. The Weather Index is the average of these five numbers, which is 0.8.

Daily Value: Measurement below threshold.
Operation: Sum
In this case, the Daily Values are the amount by which the measurements fall below 60°. If a measurement exceeds 60°, its daily value is 0. The Daily Values would then be 7,2,0,0,5. The Weather Index is the sum of these numbers, which is 14.

Daily Value: Measurement above threshold.
Operation: Minimum
In this case, the Daily Values are the amount by which the measurements exceed 60°. If a measurement is below 60°, its daily value is 0. The Daily Values would then be 0,0,0,4,0. The Weather Index is the minimum of these numbers, which is 0.

Daily Value: Measurement below threshold
Operation: Maximum
In this case, the Daily Values are the amount by which the measurements fall below 60°. If a measurement exceeds 60°, its daily value is 0. The Daily Values would then be 7,2,0,0,5. The Weather Index is the maximum of these numbers, which is 7.