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![Do we still expect an active hurricane season? [8/27/2025]](https://www.interactivebrokers.com/campus/wp-content/uploads/sites/2/2025/08/2025_Atlantic_hurricane_season_summary-700x433.jpg)
Posted August 27, 2025 at 10:45 am
Atlantic Hurricane Count Prediction Market Update 8/27/2025
Entering the 2025 Atlantic hurricane season, most seasonal forecasts predicted above-normal hurricane activity, driven primarily by warm sea surface temperatures and cool to neutral El Niño conditions.
From Artemis.
This sentiment is still reflected in ForecastEx’s market for the total 2025 Atlantic Hurricane Count, which, for example, indicates a 60% chance of 8 or more hurricanes, whereas the average is around 7.
From ForecastTrader.
However, as of today, August 27th, 2025, Hurricane Erin remains the only hurricane of the season so far.
Is hurricane activity about to pick up?
The National Hurricane Center continuously forecasts the likelihood of tropical cyclone development over the next week:
From NOAA National Hurricane Center.
Fernand will not reach hurricane strength, and the outlook does not currently identify any other disturbances primed for development over the next 7 days.
The NOAA Climate Prediction Center provides weekly-scale forecasts for tropical cyclone development two to three weeks in advance (updated every Tuesday).
One important input to these forecasts is sea surface temperatures. While sea surface temperatures remain more than sufficiently warm for tropical cyclone development over much of the Atlantic basin (>27°C), there is a wedge of relatively cool sea surface temperatures left in the wake of Hurricane Erin (which results mainly due to winds mixing the ocean and drawing up cooler ocean waters from below).
From Tropical Tidbits.
The other key input to these weekly-scale forecasts is large-scale changes in atmospheric conditions, such as those associated with the Madden-Julian Oscillation (which alters the probability of tropical cyclone formation by alternatively enhancing or reducing thunderstorm activity over areas where cyclones tend to develop).
Overall, these weekly-scale Climate Prediction Center forecasts indicate regions with a 20% to 40% chance of development next week (9/3-9/9) and separate regions with a 20% to 40% chance of development and a 40% to 60% chance of development for two weeks from now (9/10-9/16). That does not constitute an expectation for a very rapid uptick in tropical cyclones over the next couple of weeks. It is also worth noting that ECMWF’s subseasonal tropical cyclone forecast product is not flagging obvious storm development through September 22nd.
The NOAA Climate Prediction Center.
So, what does all this mean in the context of ForecastEx markets indicating a high chance for an above average hurricane season?
The situation can change dramatically very quickly, but in my view, evidence is beginning to mount against the higher hurricane count numbers.
To illustrate, consider the following simple calculation. Below is the typical cumulative count of hurricanes in the Atlantic, represented in black, along with the range from 1950 to 2024 in grey.
From NOAA HURDAT2 Data processed and plotted in Matlab.
I am also showing a projection for the remainder of 2025 in red with a range in pink. The pink distribution range is created by taking the remainder of the count trajectories from a given date going forward and appending them to the observed count so far for that date. Based on this range of trajectories going forward, I can calculate the probability of breaching the defined count thresholds in the ForecastEx Atlantic Hurricane Count market.
Based on the National Hurricane Center’s lack of identification of any areas to watch for development over the next week, I am showing results for a situation where we have still only seen one hurricane (Erin) by September 3rd.
All this seems to indicate that the current ForecastEx market probabilities for YES are too high, and the current market probabilities for NO are too low. Thus, there seems to be an opportunity emerging to obtain some good value by purchasing NO contracts at these prices.
The analysis in this material is provided for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IBKR to buy, sell or hold such investments. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.
The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Interactive Brokers, its affiliates, or its employees.
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Displayed outcome information is based on current market sentiment from ForecastEx LLC, an affiliate of IB LLC. Current market sentiment for contracts may be viewed at ForecastEx at https://forecasttrader.interactivebrokers.com/en/home.php. Note: Real-time market sentiment updates are only active during exchange open trading hours. Updates to current market sentiment for overnight activity will be reflected at the open on the next trading day. This information is not intended by IBKR as an opinion or likelihood of a potential outcome.
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