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Posted August 21, 2025 at 10:45 am
Coming into the 2025 Atlantic hurricane season, most seasonal forecasts called for above-normal hurricane activity due to warm sea surface temperatures and cool to neutral El Niño conditions.
From Artemis.
This sentiment more-or-less currently reflected in ForecastEx’s market for the total 2025 Atlantic Hurricane Count, which, for example, indicates a 60% chance of 8 or more hurricanes, where the average is around 7.
From: ForecastTrader.
However, as of August 21st, Hurricane Erin remains the only hurricane of the season so far. What does this tell us about where we will end up?
Below is the typical cumulative count of hurricanes in the Atlantic in black, as well as the range from 1985 to 2024 in grey. As of August 21st, we typically would have seen 1.5 hurricanes form and have 5.6 yet to come.
From NOAA HURDAT2 Data processed and plotted in Matlab.
I am also showing a projection for the remainder of 2025 in red that yields a distribution of plausible year-end totals conditioned only on where we are in the calendar and how many hurricanes we’ve seen form so far. For each past year, I isolate the hurricane count trajectory going from today’s date forward, then add that to this year’s year-to-date tally. The projection does not take into account any meteorological information or weather forecasts.
This basic projection suggests that since we are a bit below average now, we will end the season a bit below average as well, with only a 30% chance of finishing the year above average.
We are also entering what is typically peak hurricane season (the slope of the black line above is entering its steepest portion of the year), so what happens in the next few weeks has high leverage on the outlook for the season total.
Below is what the same plot would look like if we’ve still seen only one hurricane by one week from today. Hypothetically, if no hurricanes form by this time next week, this basic projection method would say that the 30% chance of finishing the year above average would drop to 20%.
From NOAA HURDAT2 Data processed and plotted in Matlab.
However, the National Hurricane Center is watching three areas that may develop into tropical cyclones within the next week (tropical cyclones are below the status of a hurricane). One has a 70% chance, one has a 40% chance, and one has a 30% chance to develop.
From NOAA National Hurricane Center.
Hypothetically, if two out of the three disturbances were to develop into hurricanes by a week from today, it would shift the simple projection to better-than-even odds for above-normal activity for the year.
Thus, those trading in the Atlantic Basin Hurricane Count prediction market should keep a close eye on what happens in the next week.
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.
Interactive Brokers LLC is a CFTC-registered Futures Commission Merchant and a clearing member and affiliate of ForecastEx LLC (“ForecastEx”). ForecastEx is a CFTC-registered Designated Contract Market and Derivatives Clearing Organization. Interactive Brokers LLC provides access to ForecastEx forecast contracts for eligible customers. Interactive Brokers LLC does not make recommendations with respect to any products available on its platform, including those offered by ForecastEx.
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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.
This is commentary on economic, political and/or market conditions within the meaning of CFTC Regulation 1.71, and is not meant provide sufficient information upon which to base a decision to enter into a derivatives transaction.
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