Hedging strategies using futures

In general, effective hedging is not possible in emerging future markets. In these markets the hedging effectiveness is low. The main reason for this is, futures are more often used by arbitrageurs and speculators in emerging future markets. In this study, the currency futures in Turkish Derivatives Exchange were examined for the period of 2005-2006. Calculations done according to basis which is expressed in literature, it was understood that effective hedging has not been done with Turkish USD currency futures. On the other hand, the delayed basis concept was suggested and, it was found that effective hedging with Turkish USD currency futures can be done by 1 delayed hedging. Accordingly, the hedger can make effective hedge with Turkish USD currency futures by simply takes a futures position at the beginning of the life of the hedge, closes out the position one day before from the end of the life of the hedge and, make transactions in spot market at the end of the life of the hedge.