By the end of the week, traders typically shift their focus from making money to managing risk, as they cannot adjust their positions until markets reopen on Sunday evening. However, the rise of perpetual futures contracts on crypto exchanges has changed this dynamic, allowing traders to hedge their positions over the weekend. This development has significant implications for the oil market, where traders can now capture profits during periods of high volatility.
While institutional traders have been slow to adopt perpetual futures, the growth of crypto-native firms and retail traders has driven increased volume in these contracts. As a result, the traditional 'weekend effect' in short-dated WTI options, where implied volatility is structurally depressed on Fridays, is beginning to narrow.
The availability of perpetual contracts has also created new opportunities for traders to gauge market direction before traditional markets open. Ultimately, the rise of perpetual futures may signal a shift towards 24/7 trading, where markets are always open and traders can continuously manage their positions.