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Ensemble Forecast

Trading Term

An ensemble forecast runs a weather or climate model many times with slightly perturbed initial conditions or model configurations in order to sample the range of plausible outcomes rather than produce a single trajectory. The spread among members gives an estimate of forecast uncertainty, and the proportion of members meeting a condition, such as the share reaching Category 3 intensity at landfall, can be read as a probability. Ensemble-derived probabilities are directly comparable to prices in a binary contract market, which makes them a common benchmark for assessing whether market-implied odds are adding information.

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