Traditionally, by Friday afternoon, traders on commodity desks start focusing on risk management for the weekend, considering potential geopolitical events or market-moving news that could impact their positions. However, with the rise of crypto exchanges offering perpetual futures contracts, traders can now hedge their bets over the weekend, potentially capturing profits in chaotic markets.
This shift is influencing the dynamics of short-dated West Texas Intermediate crude options, where implied volatility is no longer depressed on Fridays due to the availability of perpetual contracts for hedging. While institutional traders are cautious due to liquidity concerns and infrastructure limitations, the growth of perpetual futures trading is changing the landscape of weekend trading, providing traders with more opportunities to manage risk and capitalize on market movements.