MARKET SAVVY : Savvy Confidential: A Briefing for Investors : Think It’s Gonna Rain? Wanna Bet?

Investors can literally bet on the weather now.

Weather futures made their debut Wednesday on the Chicago Mercantile Exchange, enabling investors to speculate on what the temperature is going to be in four U.S. cities. The Merc said 53 contracts were sold in the first five hours of trading.

After mixed results with previous innovations--contracts on brine shrimp and Russian ruble futures bombed, for example--exchange executives are braced for a potentially chilly reception.

Weather futures have already been trading on the over-the-counter market for the last two years. Investors at the Merc can place their “bets” on the average temperature in four U.S. cities: Atlanta, Chicago, Cincinnati or New York.

The Merc offers monthly contracts based on heating “degree days” expected in those cities. A degree day is a measure used to describe how much the temperature differs from the standard average for one day.

The exchange would not reveal its customers, but the majority were presumed to be large utilities or insurance firms, using the contracts as a hedge.