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As news of a potential scandal surrounding Nvidia CEO Jensen Huang began to trickle out on Sunday, investors faced a simple question: what could it mean for the stock?
One answer could be found in an obscure but growing corner of the markets: perpetual futures.
On Sunday at 3 p.m. ET, well before pre-market equity trading had started, a number of traders began placing bearish bets on Nvidia perpetual futures. Specifically, perpetuals on Nvidia traded first, with Hyperliquid's xyz contract slipping to as low as $180.15 on $200 million of volume by 3:30 p.m. E.T. Both equity shares and perps on Nvidia fell below $178 overnight. It traded 7% lower on Monday.
Sunday's trading shines a light on a product that is increasingly filling a market void when traditional markets are off-line.
In their simplest form, perpetual futures are highly leveraged bets that never expire. They can track almost any asset class and trade around the clock, seven days a week.
"Perps have filled a significant gap or void in the market," said Rich Repetto, a former exchange analyst and market structure expert. "They provide access as well as price discovery to markets when there otherwise would be a vacuum."
When Iran launched a drone attack against Israel on Saturday, April 13 in 2024, traditional markets were completely closed, and crypto native exchanges that offered perpetual futures were the only global proxy for real time market sentiment in oil and the S&P 500. As that conflict escalated, perpetuals — or perps as they are called — became a go to for many traders looking for inputs over the weekend.
"It should be very clear at this point that news doesn't stop when the market is closed," said David Schamis, CEO of Hyperliquid Strategies (PURR), the publicly-traded treasury company investing in HYPE tokens that power the de-entralized exchange. " Investors want deep liquidity and price discovery when it is needed, not just nine-to-five."
Perps weren't the only new, exotic product to see increased volume over the weekend. Prediction contracts tied to Huang's potential exit also saw a spike in activity. Specifically, a Kalshi contract asking when Jensen Huang might leave as Nvidia CEO, which was listed just days before the bombshell reports, saw over $105,000 traded on Sunday.
And pre-market trading in options on Nvidia – which began trading just weeks ago – saw $15 million in options premium traded in Nvidia across about 40,000 contracts. A little over half the contracts were puts, with just under $10 million of premium tied to puts, SpotGamma data show.
The emergence of new products highlight the growing need for more information as traditional financial exchanges extend market hours trading.
"When the markets close, we lose real-time feedback," said Options Action contributor, Mike Khouw. "Futures, prediction markets and expanded afterhours trading helps fill that gap."
Disclosure: CNBC and Kalshi have a commercial relationship that includes customer acquisition and a minority investment.