call option traded on the Chicago Board of Trade (CBOT) that serves as an option for a catastrophic futures contract. The cat spread is used by insurance companies to hedge risk in the event of a disaster. In order to achieve this option, the Hedger will sell or buy a Call Option on an underlying catastrophic event contract while simultaneously selling or buying the same number of call options at a higher strike price.
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London International Financial Futures and Options Exchange (LIFFE)
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