Reviewed by: Shakira Ahmed
Fact Checked by: Shahina Islam
Are Options Haram: In this developing world, the sources of income also developing continuously too. Trading is one of the investment and income-generating sources. Options trading is one of the trading systems where you buy or sell some underlying assets within a specified price and date.
Nowadays young Muslims also want to take advantage of it. But they confuse that are options haram in Islam or not. So let’s dig down to it for our readers who wanted to know whether they may or not participate in options trading or whether it will be haram or halal in Islam.
In a nutshell, Options could be halal if done according to Sharia laws but in major cases, it falls under haram activity due to the inclusion of speculation, risk factor, etc. Stay tuned to know if options trading Islam or not.
The Majority of Muslim scholars hypothesize options are haram in Islam as they contain elements like speculation, therefore, it is haram in Shariah law. In this article, we have tried to clarify some of your doubts about whether options haram in Islam or not.
What Is Option Trading? Are Options Haram?
Options trading is a type of trading where a person can buy or sell the stock for a specific price and date. It is used to buy or sell any underlying asset, you get the choice of whether you can buy or sell it’s not compulsory that you have to buy or sell it.
Types Of Options:-
- Call option:- It is a facility provided in options trading where you can buy a security at a pre-agreed price for a specific time in the future.
- Put option:- this facility is provided in options trading that you can sell a security at a future date and time.
How Does Options Trading Work?
Options trading works whenever you have bought any option for a future time and price for a specified future date, If you get a profit before the expiration date you can sell it at an increased value. You don’t have to trade till expiration.
Are Options Haram Or Halal?
There are many debates around the globe conducted on- are options trading is haram in Islam or not. But there is no proper justification for that option is haram in Islam. Some Muslims consider it halal so they do Options trading, but some assume it is haram and unlawful per Shariah law.
So, there are some points discussed below are trading options haram or halal:-
- In Option trading, we buy or sell any stock which deals with halal products so it will be considered halal
- When this product help to deal with an unIslamic product then it will consider haram
- It is a short interval contract between trader and company so it will consider as haram
- It is not done by hand-to-hand dealing so, it will consider haram
- The speculation and financial risk factor include which make it haram in Islam.
Advice Given For Options Trading In Islam
There are many Islamic Scholars who have advised options trading
Some are as follows:-
- According to the famous Islamic scholar Mufti Taqi Usmani, there are two reasons first one is the sale or purchase cannot do for future trade second one is most of the trading is not intended to complete and have stock physically but only settlement of prices only.
- (Fatwa: 1275/1004/D=11/1434) If the goods and price both are done in credit then it will be unlawful. The Holy Prophet Muhammad has forbidden the sale of credit with credit.
Ruling On Options Contracts:-
In a resolution of the Islamic Fiqh Council, no. 63(1/7):
Options contracts- as they are known today in the global financial markets are a new kind of contract that does not come under the heading of any kind of Sharia contract.
Because the object of the contract is not a specific item or benefit, or a financial right that could be compensated with something else, this type of contract is not permissible to deal with them. End quote.
Read Also:-
Is Mortgage Haram Or Halal? Best Guide 2023
Are Binary Options Haram?
The question of whether are binary options haram or halal is a complex one, with many aspects to consider. For some people, the fact that these trades involve predicting and gambling on an undefined outcome can be seen as off-putting or even forbidden in certain religions.
On the other hand, there are many who view binary options trading not as a form of gambling or prediction, but rather as a form of investment that allows for the potentially lucrative practice of hedging one’s trading assets.
Ultimately, it really comes down to individual values and beliefs when determining if using binary options is forbidden or permissible from a moral standpoint.
For more information on “Are Options Haram” do check out the video given below:
Frequently Asked Questions
1. Are Options Haram Or Halal?
The majority of Muslim scholars declared options trading as haram.
2. What Type Of Trading is Haram?
Stocks of trading companies that deal with haram products then it will be unlawful in Sharia law. So, it will be considered haram.
3. Can Muslims Buy Options?
Yes, mutual funds can be traded as per Shariah laws where in the market there are specially designed Options and Trading Accounts available.
4. Is Bitcoin Haram In Islam?
Many Islamic scholars refer to Bitcoin haram because it includes elements like short marketing, speculation, etc.
5. Is Short Option Trading Halal Or Haram?
Yes, it is considered haram because it consists of selling the thing before buying. It is unlawful in Shariah law.
Conclusion
So, are options haram or halal? The answer is that it depends on how you use them. If you’re speculating and gambling with your money, then obviously that’s haram.
However, if you’re using options as a way to hedge your bets and protect your investments, then they are halal. It’s important to do your research and understand what you’re investing in before you commit to anything.
With that being said, we hope this article has helped clear up any confusion surrounding the question of whether or not options are halal.
Also, Read:
Is Forex Trading halal Or Haram In Islam Best Guide
