Hurricane Isaias strengthened into a Category 3 storm headed for the U.S. Gulf Coast and approximately zero traders made money off this information. The hurricane formed. Meteorologists tracked it. News outlets reported it. Retail traders scrambled to find the angle.
They bought oil futures thinking refineries would shut down. They shorted homebuilder stocks thinking destruction meant something. They went long on lumber and roofing suppliers like they'd discovered arbitrage. None of them checked if this exact trade had failed during the last forty-seven hurricanes.
Isaias doesn't care about your portfolio. Isaias doesn't know what a call option is. Isaias is a rotating column of air over warm water following physics that were established before the NYSE existed.
But someone out there is convinced this is the trade. Some guy named Derek just mortgaged his house to go long on generator manufacturers because he saw a red cone on the Weather Channel. Derek thinks he's early. Derek is not early. Derek is late to a party that ended in 2005 after Katrina when every institutional desk already built hurricane-response algorithms that execute faster than Derek can spell premium.
The Gulf Coast will get hit or it won't. Damages will total in the billions or they won't. Insurance stocks will move a quarter percent either way. By next week everyone will forget which storm this was. They'll mix up Isaias with Irma with Ivan with every other I-name that came before it.
The only thing more predictable than a hurricane's path is a retail trader's belief that weather is a trading catalyst.
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