By Friday afternoons, commodity trading desks typically shift their focus from making money to managing risk, as they cannot 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 bets and react to market changes over the weekend. This development has significant implications for the traditional 'weekend effect' in short-dated West Texas Intermediate crude options, where implied volatility is typically depressed on Fridays. With perpetual contracts available, traders may be more willing to hold or buy options they would have previously sold before Friday's close, potentially capturing profits over the weekend.
While institutional traders have yet to fully embrace perpetual futures, the growth of crypto exchanges and the increasing volume of perps trading suggest that traditional finance may be influenced by crypto innovations. As the market continues to evolve, one thing is clear: the old routine of waiting for the weekend is becoming a thing of the past, and trading desks must adapt to the new reality of around-the-clock markets.