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 emergence of perpetual futures contracts in crypto markets, traders can now hedge their exposure over the weekend, potentially changing the dynamics of short-dated West Texas Intermediate crude options.
Researchers at Energy Aspects note that the implied volatility of WTI contracts, which typically fell on Fridays, has begun to narrow, as traders can now hedge their positions through perpetual futures. While institutional traders have yet to fully embrace perpetual futures due to liquidity concerns and infrastructure limitations, crypto-native firms, proprietary trading shops, and retail traders are actively using these instruments.
The rise of perpetual futures may ultimately influence traditional markets, providing an additional source of price discovery and potentially reshaping the way traders approach weekend trading.