By Friday afternoon, the atmosphere on commodity trading desks undergoes a significant shift. For the majority of the week, traders focus on maximizing their profits. However, as the weekend approaches, their primary concern becomes managing risk. With the emergence of perpetual futures in crypto, traders can now hedge their exposure over the weekend, potentially altering the dynamics of short-dated West Texas Intermediate crude options.
This development may lead to a reduction in the 'weekend effect' in implied volatility. While institutional traders have yet to fully embrace this new paradigm, the growth of perpetual futures trading is likely to have far-reaching implications for the financial industry, potentially paving the way for 24/7 markets.