Will this be the hottest July on record?

July is off to an absolute scorcher in the Eastern U.S., with a massive heat dome ushering in record-breaking triple-digit temperatures. Will the heat continue to turn up and be the hottest July on record?

A sprawling heat wave is baking much of the nation. More than 260 million Americans are expected to top 90 degrees, while over 20 states will hit the century mark this week. More than 65 million people are forecast to endure triple-digit temperatures.

WHAT IS A HEAT DOME AND HOW CAN IT AFFECT YOU DURING THE SUMMER MONTHS?

260M PEOPLE TRAPPED UNDER OPPRESSIVE HEAT DOME, WITH SCORCHING TEMPS LASTING THROUGH AMERICA'S 250TH BIRTHDAY

The U.S. isn't alone. Extreme heat is gripping parts of Europe as well, where temperatures have topped 100 degrees and a prolonged heat wave has shattered records and strained public health systems.

Will this be the hottest July on record? We'll have to wait until the month is over to know for sure.

The National Centers for Environmental Information, or NCEI, part of NOAA, will analyze the global average surface temperature for the entire month and compare it with every previous July in its climate record, which dates back to 1850. 

If this July comes out on top, it will officially be declared the hottest July on record.

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Let's take a look at how trading on prediction markets has varied as the extreme heat wave has millions of Americans sweating.

Around the world, the NCEI collects millions of temperature observations from weather stations, ships, ocean buoys and a series of other validated observing systems.

As a trader, the key number to watch is the NCEI July global land-and-ocean temperature anomaly.

Rather than averaging raw temperatures, the NCEI measures temperature anomalies, which show how much warmer or cooler each location is than its long-term average.

That approach prevents naturally hot regions, like deserts or naturally cold regions, from skewing the global average.

WHAT IS A RIDGE RIDER AND HOW DO THEY FORM?

The anomalies are averaged over the globe using area weighting so that large regions count appropriately, and the result is a single global temperature anomaly for July.

If the month's global anomaly exceeds every previous July in the 1850–present record, NCEI declares it the hottest July on record.