By the end of the week, traders' focus shifts from making profits to managing risk, as they can't adjust their positions until markets reopen on Sunday evening. However, the rise of crypto exchanges has changed this dynamic, allowing traders to hedge their bets over the weekend. This development has significant implications for the oil market, where traders can now use perpetual futures contracts to manage their risk.
According to Energy Aspects, the availability of these contracts has led to a narrowing of the 'weekend effect' in short-dated WTI crude options. Traders can now capture profits over the weekend if the market becomes chaotic, rather than just sitting on their positions. While institutional traders are still cautious, the growth of perps trading volume on centralized exchanges is likely to continue, potentially leading to a shift in the way traders operate on weekends. 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 has also given traders a tool to gauge how the market will trade when it opens if news breaks out during the weekend.
As Flow Traders' head of digital assets OTC and product, Hein Tibosch, said, 'The perps... will be a pretty good indicator of where the market is heading.' While it's still uncertain whether perps can reshape the traditional market, the signs are that old habits are already beginning to change for traders. As CME's Duffy said, 'I think that markets will be 24/7 down the road.
All markets.'