By Friday afternoons, commodity trading desks typically shift their focus from making profits to managing risk, as they cannot actively trade or adjust their positions until markets reopen on Sunday evenings. However, with the rise of crypto exchanges offering perpetual futures contracts, traders can now hedge their exposure 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 often depressed on Fridays due to traders liquidating positions they cannot hedge over the market closure.
The availability of perpetual contracts allows traders to capture profits over the weekend, rather than simply sitting on their positions, and may create new opportunities for traders to capitalize on market volatility. While institutional traders have been slow to adopt perpetual futures, the growth of crypto-native firms, proprietary trading shops, and savvy retail traders is driving the demand for these instruments.
As the use of perpetual futures becomes more widespread, it may ultimately influence traditional markets and reshape the way traders approach weekend trading.