By the end of the week, traders typically shift their focus from making money to managing risk, as they cannot adjust their positions until markets reopen on Sunday evening. However, with the rise of crypto exchanges offering perpetual futures contracts, traders can now hedge their bets and react to market changes over the weekend. This development has significant implications for the traditional 'weekend effect' in short-dated options, where implied volatility is typically depressed on Fridays. As perpetual contracts become more widely available, traders may be willing to hold or buy options they previously would have sold before Friday's close, potentially creating new opportunities for profit.
While institutional traders have yet to fully embrace perpetual futures, the growth of crypto exchanges and the increasing volume of perps trading suggest that this may change in the future. The ability to trade 24/7 is also providing traders with a new tool to gauge market direction over the weekend, reducing the uncertainty that previously existed. As the crypto industry continues to innovate and influence traditional finance, it is likely that the way traders approach the weekend will continue to evolve.