Wind Put Barrier Options Pricing Based on the Nordix Index

Wind power generators face risks derived from fluctuations in market prices and variability production, generated by their high dependence on wind speed. These could be hedged using weather financial instruments. In this research, we design price an up-and-in European put barrier option Monte Carlo simulation. Under the existence of a structured market, producers may purchase to hedge fluctuations, allowing them recover investments maximise profits. We use speed index as underlying option, which captures risk generation Autoregressive Fractionally Integrated Moving Average (ARFIMA) model This methodology is applied Colombian context, electricity affected El Niño phenomenon. find that when phenomenon occurs, there are incentives for sell energy system because costs, including price, lower than prices. research aims at encouraging policymakers governments promote renewable sources trade options reduce uncertainty electrical due climate phenomena.