The traditional Friday afternoon mood on commodity trading desks is changing, as traders are no longer limited by the weekend trading pause. With the advent of perpetual futures contracts, traders can now manage their risk and make trades 24/7, even when traditional markets are closed.
This shift has significant implications for the oil market, where traders can now hedge their exposure over the weekend, potentially reducing the traditional Friday discount in implied volatility. While institutional traders have yet to fully embrace perpetual futures, the growth of crypto exchanges and the increasing volume of perps trading are paving the way for a new era of continuous trading. As one trader noted, 'You have more touch points for picking up and laying off risk over the weekend than you had before.' The rise of perps is also providing traders with a new tool to gauge market direction after the weekend, making it easier to prepare for the traditional market open. As the industry continues to evolve, it's likely that traditional finance will be influenced by crypto innovations, and the old routine of the 'weekend effect' will become a thing of the past.