Information trading: a potential instrument for crop loss against rain risk
Abstract
A Case Study from Cauvery Basin :
Pricing of rain derivative i.e. call option has been done using mean reversion stochastic process to hedge crop loss due to draught/flood at the Cauvery Basin.Potential of information trading on future participation and the pricing of a call option has been explored through this study.IT infrastructure has been proposed through setting up kiosks at the village level for information dissemination and trading.
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