Are options trading halal?

Most Islamic scholars consider margin trading, day trading, options and futures prohibited by sharia (according to Faleel Jamaldeen). Options (stocks, assets, etc.) are considered haram, as they are based on ambiguity and speculation. Islam insists on mutual benefit and, in options trading, one entity benefits at the expense of the other party. This type of transaction is included under the heading of prohibited transactions that it is not allowed to initiate or trade.

As we said earlier, there is no definitive answer for options trading to be halal or haram. While many people consider options trading to be halal and therefore participate in the options market, there is a significant population who consider that it is not in accordance with Islamic principles. Options are a type of derivative, which are all zero-sum games. Sheikh Yusuf DeLorenzo has a similar view, stating that this type of economic activity is clearly prohibited by the shariah.

Trading CFDs or binary options is certainly prohibited, since you don't own any part of the asset. Since binary options trading involves an element of speculation, risk and interest (riba), they are considered haram in Islam. This is an agreement that gives the buyer of this option — who is the owner of the financial certificates — the right to sell a specified number of shares or other financial certificates for a specified price within a specified period, but is not obliged to sell, so it is optional. Therefore, what is sold is the option itself, and this contract is binding on one of the two parties, namely the seller of the option, while it is not binding on the other party, that is, the buyer of the option. The way to improve your trading is to sign up for the best option alert service here.

It should be clearer if you are discussing long options or spreads positions, short options positions or anything else. I think everyone is missing the point, speculating on the price of options is irrelevant because no one on this blog is a real derivatives trader and has a sophisticated enough model to see where implied volatility is cheap or not and trade. A binary option is an exotic financial option in which the result is a fixed monetary amount or nothing. On the one hand, you say: “The option contract can only continue when both the seller and the buyer agree to proceed and then say “YES NO”, the seller or the buyer can terminate and close their option contract at any time they wish to.

In both put and call options, this is exactly what happens, and that is why many religious scholars say that options trading is Maysir, which means gambling. Just because it's good doesn't make an exchange halal, I guess and I expect an opinion that just because it's an option doesn't make it haram. In any case, to be able to trade options, you will need a significant amount of money in your broker account (more than 100,000) and a sufficient margin. As for the option contract, it is a deferred contract in which one party commits to the other party to assume the risk of price fluctuations during the option contract period.

The seller (or buyer) of an option can close his position, but only if there is a willing participant on the other side of the trade: a willing buyer (or seller). With about 14.2% (census 201) of the country's population is Muslim, it is increasingly being asked whether options trading is halal or haram. In short, I think the distinction you have created between speculating on stocks and options is a bit arbitrary: a stock is a “derivative”, in a sense, as much as it is an option. And please don't trade leveraged products without understanding the risks involved, there is a reason why 80% of retail traders lose money trading with CFD brokers.