By the end of the week, traders typically shift their focus from making profits to managing risk, as they cannot adjust their positions until markets reopen on Sunday evening. However, with the advent of perpetual futures contracts in crypto markets, traders can now hedge their positions and react to market changes over the weekend. This development has significant implications for the traditional 'weekend effect' in short-dated WTI options, where implied volatility is typically depressed on Fridays.
As perpetual contracts become more widely available, traders may be willing to hold or buy options they previously would have sold before Friday's close, potentially creating new opportunities for profit. While institutional traders have been slow to adopt perpetual futures due to liquidity concerns and infrastructure limitations, the growth of crypto-native firms, proprietary trading shops, and savvy retail traders is driving the demand for these instruments. As the market continues to evolve, it is likely that traditional finance will be influenced by crypto innovations, and the distinction between weekday and weekend trading will become increasingly blurred.