{"id":708,"date":"2026-10-06T07:47:00","date_gmt":"2026-10-06T14:47:00","guid":{"rendered":"https:\/\/quantcha.com\/news\/?p=708"},"modified":"2026-10-05T19:59:12","modified_gmt":"2026-10-06T02:59:12","slug":"kalshis-hourly-temperature-markets-hot-or-not","status":"publish","type":"post","link":"https:\/\/quantcha.com\/news\/kalshis-hourly-temperature-markets-hot-or-not\/","title":{"rendered":"Kalshi\u2019s Hourly Temperature Markets: Hot or Not?"},"content":{"rendered":"\n

Kalshi didn\u2019t build its own thermometer for you to bet on temperature coin flips.<\/em><\/p>\n\n\n\n

On October 1, Kalshi filed a new set of contracts<\/a> with the CFTC: temperature indexes for 13 metro areas. One line in the terms caught my eye. \u201cThe Source Agency is Kalshi.\u201d The exchange isn\u2019t settling these on the National Weather Service or a weather vendor. It built the thermometer.<\/p>\n\n\n\n

Puget Sound is on the list, so I took it personally. (I can save everyone the trouble on that one: 58 and drizzling.) I pulled every trade and came away with two impressions. People are using this. And it doesn\u2019t look finished.<\/p>\n\n\n\n

What\u2019s actually listed<\/h1>\n\n\n\n

Four of the 13 have markets today: Miami, New York, Chicago, and coastal Los Angeles. Every hour, each gets ten fresh contracts with strikes one degree apart, all asking whether the index will be above that level at the top of the next hour. Each trades for 60 minutes and settles on the reading at the top of the hour.<\/p>\n\n\n\n

The index is an average of airport weather stations, eight in New York and five in Miami, recalculated every minute and published to a hundredth of a degree. That precision is mostly arithmetic. Each station reports in whole degrees Celsius, and Synoptic, the data provider, lists that among the limitations<\/a> that mean these readings \u201cmust not be used for aviation.\u201d It has yet to weigh in on fitness for hedging your ice cream shop.<\/p>\n\n\n\n

Miami has traded hourly since August 15. (Earlier hourly versions settled on a single reading from The Weather Company. Kalshi\u2019s blended model blows away the risks previously exposed by Polymarket\u2019s Hairdryergate.) Since launch, buyers have paid about $11 million for 18.4 million contracts, which is a lot of interest in whether Chicago will be 61 or 62 degrees at 3 PM.<\/p>\n\n\n\n

\"\"
One day of the New York index, minute by minute. The gray lines are the strikes, and only the orange dots settle anything.<\/em><\/figcaption><\/figure>\n\n\n\n

It\u2019s 72 now. What will it be in an hour?<\/h1>\n\n\n\n

That was my first reaction, and the data mostly agrees. Across about 3,000 hours, the typical hourly move is 0.7 degrees, and in 58% of hours the index moves less than one. Temperature follows the sun, so the hour of the day alone explains more than half of the change in New York, Chicago, and Los Angeles. (Miami comes in at 28%. Afternoon thunderstorms keep their own schedule.)<\/p>\n\n\n\n

In other words, most hours come down to one strike, and the question is whether the index steps across a whole degree before the clock runs out. With five stations, one thermometer ticking over moves the index about a third of a degree, so near a strike you\u2019re partly trading rounding. You can see the staircase in the chart.<\/p>\n\n\n\n

You can\u2019t trade the timing<\/h1>\n\n\n\n

This is where the options trader in me got stuck. Say I think New York slides to 60 by 8 PM, but I don\u2019t know which hour gets it there. The natural trade is to own the 8 PM contract and sell the earlier hours against it until it happens. That\u2019s a calendar spread.<\/p>\n\n\n\n

Unfortunately, it can\u2019t be built. Each market is created about ten minutes before it opens, lives for an hour, and nothing lists behind it. There is exactly one expiration at any moment, so the view I\u2019d want to express\u2014about when\u2014is something I can\u2019t trade.<\/p>\n\n\n\n

Who comes out ahead<\/h1>\n\n\n\n

My first research pass covered three days and indicated buyers of near-certain outcomes at 95\u00a2 and up were quietly coming out ahead. That would have made a tidy sequel to last week\u2019s piece on premium sellers<\/a>, but then I decided to run the full history to make sure. I pulled all 603,661 trades back to launch and grouped the buyers who crossed the spread by the price they paid. Turns out there\u2019s no reliable winner, especially once you extract fees.<\/p>\n\n\n\n

\"\"
What $100 of contracts came back as, by the price paid, after estimated fees.<\/em><\/figcaption><\/figure>\n\n\n\n

Buyers at 95\u00a2 to 99\u00a2 won 98.1% of the time at an average price of 98.3\u00a2 and lost about 0.3% after fees. Last week\u2019s long-dated favorites paid crumbs. Compressed into an hour, they pay slightly less. Longshot contracts at 5\u00a2 or less paid off 1.7% of the time, which works out to losing half the stake.<\/p>\n\n\n\n

The interesting group is in the middle. Between 21\u00a2 and 79\u00a2, buyers won 53.1% of the time at an average price of 50.6\u00a2. That\u2019s about 1.7% after fees, or roughly $59,000 across four cities since launch. Somebody hitting those quotes knows slightly more than the quote does. My guess is they\u2019re watching the station data directly, but I can only see trades, not accounts.<\/p>\n\n\n\n

Add everyone up and they made about $131,000 before fees and paid an estimated $152,000 in fees. The steadiest earner in an hourly temperature market is the exchange. That\u2019s how exchanges are supposed to work, but it\u2019s worth knowing before you take up thermometer trading as a side income.<\/p>\n\n\n\n

Who are these actually for?<\/h1>\n\n\n\n

The good news is that there\u2019s a clear user today: people want something to trade every hour, and the volume says they\u2019ve found it. The prices are honest, too. Over the full history, a contract bought at 75\u00a2 paid off about 75% of the time. But I don\u2019t think hourly traders are who Kalshi built this for.<\/p>\n\n\n\n

Where I think this is going<\/h1>\n\n\n\n

Too much of what Kalshi built is sitting unused. The index runs every minute in 13 metros and gets used once an hour in four. The filed terms allow contracts on any period from a minute to a year, plus a second type that pays if the index touches a level at any point in the period. A daylong version of that is the long leg of the calendar I couldn\u2019t build. None of it\u2019s listed yet.<\/p>\n\n\n\n

Then there\u2019s the list of metros. It includes Kansas City and Southeast Michigan, where I can\u2019t find a daily temperature market on Kalshi, and skips Atlanta, Phoenix, and Denver, where there is one. Most of the 13 are big load centers in the country\u2019s organized power markets, and temperature is what moves power demand. Kalshi already lists contracts on peak electricity demand in Texas, and this week new power price series for hubs in Texas, the Midwest, and the mid-Atlantic showed up in its public market data with nothing trading on them yet.<\/p>\n\n\n\n

So here\u2019s my read: the hourly markets are the onramp. They give a brand new index a track record and a crowd before anything larger sits on top of it. What comes next is a weather-and-power complex, with a city\u2019s temperature trading next to its price of power. The real customer for that is anyone whose costs move with both, like a utility, a power trader, or a data center operator. It\u2019s the same order of operations I wrote about in compute<\/a>: ladders first, continuous products behind them.<\/p>\n\n\n\n

None of this has been announced, and I could be reading a rollout schedule as a strategy. Weather hedgers also trade degree days, which add up over a season, and nothing in the filed terms does that.<\/p>\n\n\n\n

Where I land<\/h1>\n\n\n\n

As listed, an hourly temperature market is mostly a coin flip on one degree with a fee attached, and the trade I\u2019d potentially be interested in isn\u2019t available. As a foundation, it\u2019s more compelling than it looks. I\u2019ll be watching which metros light up next and whether those power hubs get markets. If Kalshi listed a full day of hours at once, would you trade the calendar?<\/p>\n","protected":false},"excerpt":{"rendered":"

Kalshi didn\u2019t build its own thermometer for you to bet on temperature coin flips. On October 1, Kalshi filed a new set of contracts with the CFTC: temperature indexes for 13 metro areas. One line in the terms caught my eye. \u201cThe Source Agency is Kalshi.\u201d The exchange isn\u2019t settling these on the National Weather … Continue reading “Kalshi\u2019s Hourly Temperature Markets: Hot or Not?”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":711,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[8],"tags":[],"_links":{"self":[{"href":"https:\/\/quantcha.com\/news\/wp-json\/wp\/v2\/posts\/708"}],"collection":[{"href":"https:\/\/quantcha.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/quantcha.com\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/quantcha.com\/news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/quantcha.com\/news\/wp-json\/wp\/v2\/comments?post=708"}],"version-history":[{"count":1,"href":"https:\/\/quantcha.com\/news\/wp-json\/wp\/v2\/posts\/708\/revisions"}],"predecessor-version":[{"id":712,"href":"https:\/\/quantcha.com\/news\/wp-json\/wp\/v2\/posts\/708\/revisions\/712"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/quantcha.com\/news\/wp-json\/wp\/v2\/media\/711"}],"wp:attachment":[{"href":"https:\/\/quantcha.com\/news\/wp-json\/wp\/v2\/media?parent=708"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/quantcha.com\/news\/wp-json\/wp\/v2\/categories?post=708"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/quantcha.com\/news\/wp-json\/wp\/v2\/tags?post=708"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}