By the end of the week, traders' focus shifts from making money to managing risk, as they cannot adjust their positions until markets reopen. However, with the rise of perpetual futures contracts on cryptocurrency exchanges, traders can now hedge their bets over the weekend, potentially capturing profits if the market becomes chaotic. This development has implications for the 'weekend effect' in short-dated West Texas Intermediate crude options, where implied volatility is structurally depressed on Fridays.
The availability of perpetual contracts may lead traders to hold or buy options they would have previously sold before Friday's close, creating new opportunities for profit. While institutional traders are still cautious about entering the market due to liquidity concerns and infrastructure limitations, the growth of perpetual futures trading is quietly influencing the oil market and potentially paving the way for a 24/7 trading environment.