Options: Halal Or Haram?

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Options: Halal Or Haram? Is Options Trading Halal Or Haram In Islam
I’ll tell you what I think and then you can make up your own mind. I don’t represent anyone but myself so make sure you take the opinions of multiple sources before you reach a conclusion.
Allah SWT prohibits something called Al Maysir. In the generous Quran 5:90-91, the translation of what SWT says is:
“O you who believe, intoxicants, Maysir, sacrificing for idols and making decisions based on games of chance are sicknesses from the work of Satan, so avoid these things so you may prosper. Satan desires to create enmity and hatred amongst you through intoxicants and Maysir and to stop you from praying and remembering Allah. So will you abstain from these things?”
THE HOLY QURAN 5:90-91
As I pointed out in a previous video, Maysir is defined as an activity where the following two conditions are met:
Participants are risking wealth in hopes of material gain. i.e. They are creating risk.
There are no prospects for creating any value from the activity.
A prime example of Maysir is gambling in a casino. When players gamble, they are risking their money in hopes of material gain (first condition) and their act of gambling carries no prospects of producing anything beneficial for anyone (second condition).
Keep in mind, when I say “beneficial” I am referring to usefulness. Money is not useful in and of itself, rather, it is a means for transacting in that which is useful.
As mentioned earlier, options can either be used to hedge risk or to speculate on price.
When using options to hedge risk i.e. transfer a certain risk from the bearer of this risk to another party more able to assume this risk, this creates value.
Suppose you had a backpack full of rocks that were wearing on you and you were able to transfer your backpack to someone else with a stronger back that had no problem carrying your rock-filled backpack for a fee. This creates value.
You get the backpack full of rocks off of your back and the stronger individual is able to monetize their strength by carrying your backpack.
When options contracts are used to hedge risk, the backpack full of rocks represents risk and the options contract represents the mechanism by which the backpack full of rocks is transferred from your back to another person more willing and able to carry the weight.
So while condition 1 in identifying Maisir can certainly be said to be true whenever options are being traded, condition 2 which is that there are no prospects for creating any value cannot be said to be true when the options are being used to hedge risk.
#IslamicFinance #OptionsTrading #HalalOrHaram #Quran #halal #haram
Let me know what you think in the comments!
Disclaimer: Anything you hear in this video is an opinion. It is not to be considered personalized financial advice. Make sure you do your own due diligence before making any investment decisions.
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[@ahmedelmolla87able]

SA. I agree with your point about Mayser. And I do realize that you are ok with concept of transferring risk for a fee. However, I think there are other issues. For example, in the case of a call option, you are selling the right to buy some goods from you at a specific price, and since you don't know if the option buyer will ever do that, you basically buy it when they ask for it with market price and then sell to the owner of the option with the agreed upon price. However, this is completely against what the prophet pbuh mentioned that you shouldn't sell what you don't have. لا تبع ما ليس عندك. What if you cannot fullfil that order at the time? You are basically selling a contract that can force you to sell what you don't own. The other issue is gharar. Unlike the case of insurance for example where the amount of risk is quantified in the form of the coverage amount maximum, in a call option scenario, the amount of risk (loss to the option seller) is unlimited since the price of the good can skyrocket beyond expectation. This also gives the buyer unlimited leverage for a set fee which makes it kinda like winning the lottery.

[@practicalislamicfinance]

WS. first point: selling the call without already owning the underlying asset would not be done for the purposes of hedging risk. Accordingly, would not abide by the condition I set forth for permissible use of an option. second point: same as first. option seller that doesn't own underlying asset is not hedging risk.

[@ahmedelmolla87able]

@@practicalislamicfinance Thanks for the response. Can you please mention those caveats in the video since they are not clear in your explanation and I think they are pretty important?

[@practicalislamicfinance]

@@ahmedelmolla87able In this video I tried to lay out the principles governing permissibility and prohibition namely using options for hedging risk vs. speculating on price. Perhaps in another video I will discuss more the practical implications of these principles. I pinned your comment to the top because I think it's a useful discussion. Thank you for your feedback.

[@hamza8342]

@@practicalislamicfinanceSalam, if I sell credit spreads on either call or put side would this be halal as the profit and loss is defined? When selling naked options on put side, if you break it down technically it seems halal, on call side offers unlimited risk which maybe haram I don't know.

[@tousifkhan7349]

@@practicalislamicfinance BROTHER PLEASE ANSWER

[@UsxrUnknxwn]

10:10 for quick answer

[@booyakashaa862]

Ty

[@1slamExplained]

Thanks

[@mosadik9755]

i just cancelled one call option and one put option after watching this, jazak Allah khaeer

[@tauseefmughal3532]

Excellent explanation. Thank you for your viewpoint. May Allah keep us all away from wrong doing.

[@sulemanomar]

alhamdullilah very well covered as always

[@DhismoPrideC]

Please say to me it's Haram or Halal straight I don't understand the logic

[@ahmedhaqibansari2293]

Options are haram ,in option one person profit is another person loss and equity holding buying and selling are halal because it's doesn't cost anything

[@askarsary2837]

😂😂

[@gladmedyedev4937]

@@ahmedhaqibansari2293 so wht application can i use for halal trading?pls recommend me?

[@mohamedbenyamine9534]

he's saying that since it doesnt satisfy BOTH condition of gambling (it only satisfies one), it is HALAL. He should clarify though how different kinds of options strategies expose you to different kinds of risk (see covered calls and naked calls).

[@salihaameer7675]

@@mohamedbenyamine9534 I’m still so confused. So is it HALAL or HARAM?

[@OudioBooks]

Salaam. So in options there are 4 things you can do. According to your opinion Buy calls - haram Buy puts - OK (within measure) But what’s your opinion on: Sell puts Sell calls

[@MyGoodDeeds]

Thanks Alot Brother. May Allah SWT reward ✨ you. Jazak-Allah Khair. 🤗

[@mraa4950]

مَا شَاءَ ٱللَّه‏ Good explanation جزاك اللهُ خيرًا for your effort

[@Tigar...Shabbir]

Just for clarification after reading some other comments, can one trade options if they already own the stock Xyz?

[@ibraheemkhan9116]

So you’re defining what “Masir” is and not really paying attention the rest of the Ayah. It says “making decisions based on chance” that’s exactly what this is, no? Aren’t gaining based off chance?

[@lee0sin]

Can you make a video on covered call strategy and if it’s permissible. Thank you!

[@Thegiant4296]

In the video you mention that when buying shares you transferring risk...but at the same time you are also creating risk because the stock can go against you. There’s no such thing as a risk free investment in the stock market. You will always create risk no matter what because you can always lose money on your investment. another point I had was, what if you buy calls and puts to only sell them at a higher premium price to what you bought them for. Is this allowed? And if options are haraam because of speculation then buying shares should also be haraam because you are speculating prices will go up.

[@coolboy18king]

I had the same question.

[@amalzamani7844]

Imo, buy call/put options means we have the right to buy that stock at the specific price (premium) with an agreed date to sell(expire worthless) which means we understand and create the risk of the trade. Once the stock hit the price that we wanted and executed the trade, the call/put seller agreed on selling the options at the price and risk both agreed on. How is it haram when they know of the risk they took and agreed on? I think the things that make it haram is lack of knowledge which lead to hope trading - gambling not of the infinite risk that they know and agreed on taking.

[@ALI-xi5np]

@@amalzamani7844I’m confused can help plz?

[@brighthopes1526]

Obviously

[@brighthopes1526]

Yeah obviously bro

[@adama8955]

@practicalislamicfinance Salamat Rakkan... Great channel. There are so many different ways to use options. Can you please list which options are not speculative and can be used to hedge risk only. Much appreciated.

[@sikanderkhan8383]

I believe as long as person is using cash account for options trading its allowed , I did not have clear direction from this video , please guide me if I am wrong

[@mizmimi9091]

Salam brother. Are you able to elaborate regarding binary? I am confuse and im sure many out there are as well. Note that, trading in binary with strategy and analizing the market as well. Thank you brother.

[@sidratulmuntaha4034]

Is binary halal or haram?

[@SaadAhmed3000]

I understand your logic behind selling naked calls and puts, and agree with it. but I'm not sure why one cannot purchase calls/puts to speculate on a price. It's not like you get nothing in the end. There's an actual exchange of the underlying asset if you so choose. You're essentially "locking in" a price to purchase 100 shares in the future, from someone. And the other other party is "locking in" a price that he's comfortable with selling at. There's real value created for both parties. The underlying promise of the contract (option to buy/sell shares) is still valid regardless of whether or not its market value 'expires worthless'.

[@abdulrahmanmohammed6426]

Saad Ahmed that’s mean nobody can creat a contract to sell without owning an asset-shares- ? If so that means there is an actual transfer of shares between 2 people and these shares will be owned by the buyer if he bought and hold the contract till the end of this contract’s date. Am I wrong ?

[@SaadAhmed3000]

@@abdulrahmanmohammed6426 yes. When you buy a call, you are essentially buying the right to own 100 shares in the future, for a fixed price. If you use that right (before expiration date), then there's an actual exchange of assets. This seems like it should be halal to me.

[@zryanhassan5129]

So do you think trade options is halal? Call or put?

[@SaadAhmed3000]

@@zryanhassan5129 In my understanding, there should be nothing wrong with buying calls/puts. Allahu alam

[@zryanhassan5129]

But he saying it is(option trade call and put ) not halal? I am really confused ❔

[@hakim.a78]

Salam aalaykoum wa rahmatoullah, Jazak Allah ou kheir brother for the always good and generous work. May Allah bless you. I have one question as far as selling covered calls and cash secured puts are concerned. Could you please share your view on these transactions or recommend any resource or reference for a sharia based analysis of these transactions for managing risk and profitability of an existing position ? There seems to be an opinion stating that selling covered calls would be halal whereas selling cash secured puts still remains at best doubtful / to be avoided. The few ressources I found seem to explain a position of oulamas analyzing unfortunately only trading « naked » options, which clearly are a zero sum game tool of speculation, and not options while possessing the underlying asset or the necessary cash. Thank you in advance for your insights/help and always a pleasure to watch your videos 👍😊 Cheers from France 🇫🇷 and all the best in dounia and el akhira. Salam aalaykoum wa rahmatoullah.

[@dralshaer85]

May Allah bless you, very nice explanation

[@practicalislamicfinance]

Thanks Dr. Mohammed.

[@dralshaer85]

@@practicalislamicfinance Welcome brother, I need to ask you about something in the market bcz I'm confused about it. If possible through my WhatsApp I will be thankful. Jazak Allah khair 00966551766272

[@zryanhassan5129]

@@dralshaer85 salam brother so traid option is halal or no? Because I am still confused, what did I understand from the video ?

[@shackboom5973]

Man i be waiting for this kind of chanel 😇 hello im new subcriber

[@practicalislamicfinance]

Glad to have you

[@MohamedTaryamArchiveofMedicine]

Hello thank you soo much for explanation Its very clear regarding speculation But hedge risk do you mean like bull puts spread or bear call spread its okay to practice it?

[@mohamedbenyamine9534]

basically, since hedging involves balancing your long/short position on an asset with a short/long position on an options contract.

[@abushah1]

Is binance future Cryptocurrency trading is halaal. ? Please answer to my question . Am very much worried about this . As bnbusdt, litusdt and linkusdt trading charges zero % interest . Can we do only these three future trading.? Thanks

[@Tigar...Shabbir]

As-salaamu Alaikum brother, Masha'Allah, excellent information that I needed to make my decision on not trade options. Barak Allah Khair

[@ibrahimmohammed3386]

brother your video is not clear... can you please tell in yes or no, if option trading is halal or haram?

[@jsjsskdidk647]

Did u find out bro? A lot of confusing answers

[@alliswell.keepsmiling8679]

Halal or haram???

[@qwertyasf]

Better to stay away if you didnt understand it

[@dianadaniel850]

What do u mean by There are no prospects for create any value, can someone answer this?

[@Nas989.]

Soo options is fine if you have bought the shares. Soo going long. But to protect your position you can buy a put to limit your risk to the down side? Is that correct. So buy tesla stock at × price. U want to keep it for 2 years. To limit the risk you buy a put incase price goes down This is fine?

[@saudpanchi1500]

Jazak Allah Khair brother.. you have given really great explanation brother

[@samvan007]

Asslamu walikum. Based on your description covered call option is not allowed (I own the stock and write a call option to get a certain price target and leave the upside and risk for the option buyer to gain further above the strike price) . Is that correct?

[@fathinullah7049]

Great Video! Whats your opinion on selling covered calls if you own the 100 shares? What about Cash Secured Puts? Are these permissible?

[@aijaz4441]

I am here to find out if selling covered calls and puts is permissible in Islam or not.

[@moeqarqaz1801]

@@favoritef9992 Hi bro, Selling put is not an interest, if you sell a put to someone means you are insured the other person that you will buy his/her shares at given price(strike) and at the expiration date if the price of the stock dropped to the strike price or below at the expiration date, if it doesn't you are not obligated to buy the stock from the person , in other word you are working as an insurance company for other people to hedge their risk on the stock they are owning.

[@Reeem128]

Is it halal to trade in binary option in currencies? With proper analyisis and short 1 to 5 minute trades?

[@ya00007]

Speculation is betting whuch is haram. However hedging isn't haram because it eliminates risk. Its insurance

[@MaryamKhan-vf3zo]

I have an opinion that options are halal...and I can explain why! Look we buy options with money to give us protection from loss in the future,... So then we can see if we need the protection or not, in accordance with the circumstances. now we have spent money to buy this protection , so in what way this protection is haram? We have spent money to save ourselves from future losses., Like we do in normal circumstances,.. we buy safety gears to protect ourselves from harm, that may come in future. Plz explain if I'm wrong!

[@HuseinKirefu]

If selling a covered call is halal, when is buying a call halal?

[@adam_bh]

Yes sell a call on shares you own would be halal cause you’re protecting yourself from the downside risk. So you’re creating value because it’s a hedge against your position in case it falls in the near term

[@iceilgar8105]

@@adam_bh salam. And what about pocket option? Do you think it’s halal or haram?

[@somethinggreaterthanself7843]

I currently bought call options on 6/5 because I know the stock was under valued due to bad news the company has been facing and the price is too low for how big this company is. I was correct and the price jumped on that same day and Friday and having decided to sell or exercise my right to buy the stock. Was this transaction Halal.

[@guywithlesshope356]

binary option halal or haram?🤔

[@mohammedinamulhasan7828]

Instead of buying stocks can l buy call option in stock is it permissible plz reply

[@JOHN-sk4xq]

Call options being haram has been common sense to me for a while. I always thought buying a commodity stock for less and holding it for a long time is not haram because its like a bazaar when you buy potato and sell for profit.

[@fzntradingchannel3479]

Asalamwalaikum sir i basically trade in Index future at times stocks future and options and based on my analysis with proper risk management ( no gambling) , as u know buying a future index one lot is expensive so in tht case can we trade in options ? Call or put ? Is it halal ?

[@muhammadosaidiqbal6014]

Not halal according to Dr Zakir Naik.

[@dianadaniel850]

From this video, we can see option can be two way, 1 create risk and 2 hedging the risk its not totally gambling, i.e not 100% haram

[@dianadaniel850]

Ulama must discuss this again

[@shasesoomro116]

Great video brother. Thank you

[@shahrukhjsr]

Assalam Alaikum...is trading in index option haram too? Like I used to trade in nifty 50 options. Please reply

[@nabilsalah9966]

Salam alaykoum Is selling put option considered as halal too ?

[@Islamisinmyheart]

As salaam walekum. Can you please let me know if the following is allowed? I'm planning to buy 100 shares of AAPL currently trading at $126 with a Sell and Call option for May 14 with a $130 strike and $3.20 limit price. Please let me know. Thank you

[@moosy]

We need more scholarly debates. Maybe have Joe Bradford on as well. Would be amazing to hear

[@gomezsamir]

I want to sell covered puts and calls, thereby collecting the premiums. That's halal right? I'm the one that will be carrying a person's backpack for a fee

[@DrAliGeorge]

I believe so

[@RoyceBenning]

Yes

[@aamirsuleman9815]

That’s good to know. Makes my life easier

[@reealitey]

Good because I invest in ETFs that do covered calls. I'm so glad something is not haram now. I have been scared to search for this topic ha

[@rahimzhan91]

@@reealitey QYLD?

[@nettyawal]

Salam Sir, it is same with im.playing now? Buy Facebook or Tesla.option dan selling the option if price reach strike price before expiry date. If the price does not go up/down until reach expiry date, premium paid for that option will be burned.

[@minhaz22]

What about the option seller? They cannot possibly own every asset they sell call option for that might or might not be exercised. Are you saying it’s only halal to buy but not sell ?

[@mhaseeb8015]

Even there is no interest if you are not borrowing. Is it halal in that condition?

[@Haydarah313]

what about futures futures brother? Halal or Haram?

[@syedmahmood98]

Salaam brother. Would you touch up on the issue of buying and benefitting from warrants? Thank you. Jazak Allahu Khair

[@Yas-ez1kg]

I don't understand, you don't own the stock share in neither speculations because you are merely "speculating" in both so how is it permissible to speculate on stock prices but not permissible to speculate on options prices?

[@27ibrah]

in option you are betting against each other (buyer and seller) that is gambling, which is haram in islam. in regular stock there is no betting because both you and the CEO of the company hope that the company will do well and the stock price will go up

[@mmoneim1849]

What if i used the option trading hust for buying or calling for an option! As i cannot sell what i donot own so does that mean i can use "option trading" for buying only and not selling?

[@DarkKnightDad]

If you are only using options to buy, then that means you trust that this stock will rise. So, why not just buy the stock 😅

[@mmoneim1849]

@@DarkKnightDad i guess i can't because noone can trust a stock and that would put me in a huge risk/loss 🤷🏼‍♂️😂

[@asmailakram4394]

Hey could you tell me about option(expert,iq,forex) is halal or haram

[@AnasKhan-le8ev]

Walekum assalam What about nifty and bank nifty??

[@alaouchicheabdellah4986]

thanks brother for sharing, does binary options falls under the same category? are they hallal in Islam could you please talk about it, many muslims are trading in binary option, and no one is talking about it.

[@inmatra171]

Is Selling Covered Calls ( you already own at least 100 stocks of the Option) Halal? What about buying LEAPS ( Long Term Equity Anticipation Securities) Options with longet than 1 year Expiration, Calls or Puts

[@SAFEER_THOTTATHIL]

I don't know the language please tell me Is options selling is haram?

[@funnyvideosera]

Salama Aleikum brother? I didn't know if it was haram and 10 options what should I do brother?

[@Human_being_2045]

Brother than even selling covered call or put deemed as selling gambling instrument.?

[@chikwendusolomon1044]

Assalamu alaikum. Brothers and sister what about binary option

[@zakariazakaria5835]

brother is trading future contract haram?

[@mabubakersiddique1431]

Bro please tell me binary tradong is halaal???

[@kani690]

ASLAMO ALAIKUM As new to trading, all i know about the option trading is call and put. If I play call and hit the strike price i will make money and same for put. My concern is this that if somebody play put , put means the price will come down then that person makes money.Thats look weird as the company stocks goes down or I would say that money has some loss but that person who plays put will make money by selling his contract. But what if i say i will play calls only that means when the company makes money so am I. I know there is risk but I would say there is risk factor also in the actual stocks too. Is this still consider gambling , i know someone say when i play calls on the other side someone is playing puts. But my analysis or my intension is clear that i will make money only when the stocks goes up. It needs lots of money if i dont play options and but actual company stock. So in contract it is clear that there is no obligation to buy those stocks so i can simply sell my contract. Kindly explain this is this Halal or Haram. thanks and JazaKALLAH in advanced May ALLAH guide us to right path and give us success here and here after Ameen.

[@skmustakim8251]

ASSALAMWALAYKUMASSALAM, IF I HAVE STOCK IN MY DMAT A/C AFTER THAT I HAVE SELL CALL OPTION AND RECEIVE THE PREMIUM IS THAT PREMIUM IS HALAL OR HARAM.

[@traveller7661]

Isn’t there interest involved on margin accounts? If so, how do you claim this product is halal?

[@djulbey]

My brother how do you feel about binary/fixed options? Do they work the same way, as far as securing the asset and providing actual value? Suppose one has done the research and has a system in place that minimizes the risk to 0.01%

[@sidratulmuntaha4034]

Is binary halal or haram?

[@guywithlesshope356]

binary halal or haram??🤔

[@xezaofficial]

it's gambling, so it's haram

[@iam_uvi]

ok with all due respect i have a point of disagreement her can you pls clarify on it. you said that speculators create no value but hedgers do. now for hedgers to transfer their risk there must be someone willing to take the risk. this person who is willing to take the risk in hope of making gains is speculator then isn't value still added here. cz without speculators there wont be liquidity for hedgers to transfer their risk.

[@Yasmin-vd8uz]

Thank you brother for another great video!

[@-AbrarAhsan]

Can u please explain if enjoying premiums on covered calls is halal?

[@practicalislamicfinance]

Check out my most recent video on the topic

[@mujthabams9802]

Wa alikumussalam Mashallah barakallah ..

[@ShihabPersonalFinance]

good video, what do you think of SELLING OPTIONS?

[@ShihabPersonalFinance]

@@favoritef9992 covered calls

[@ShihabPersonalFinance]

@@favoritef9992 no video talks about it, but I think it is good based on the logic

[@ShihabPersonalFinance]

@@favoritef9992 in my opinion yes, you are selling insurance

[@almesniliya12lb42]

TRADING ON STOCK EXCHANGE IS HARAAM - THESE GUYS ARE MISLEADING THE UMMAH TO MAKE MONEY | The Stock Exchanges and the Islamic Perspective In the capitalist system, the stock exchanges play the same role as the interest system which confines and concentrates wealth within a small circle of people. The stock exchanges are even more harmful because they turn the economy from trading in real goods and services to mere numbers and papers from which people profit and incur losses. In this system, wealth is inflated multifold without any real production of goods or services. When the markets rise the people get the illusion that the economic growth is high and similarly when the markets plunge low, people are shocked because their wealth which they possessed or thought they possessed is blown away while the financial speculators take away the real wealth. An ordinary investor makes a profit by buying shares and selling them off when the prices increase, while a speculator earns his profits through the so called short term trading wherein he buys shares and disposes them in order to bring down the prices. Indeed, the stock exchanges and financial markets are the cradles of capitalist crises which leave behind scores of people poorer having exposed them and their wealth to severe losses. However, under Islam the buying and selling markets are regulated by the laws of Shari'ah which are a guarantee against conflicts and ensure that no one usurps the wealth of others by invalid and wrongful means. Some of these regulations are: A: Any goods not owned and possessed by the seller are not allowed to be sold. Therefore any good that has been bought but not taken possession of, is prohibited to be sold. The practice of the stock exchanges is that shares and goods are bought and sold many times over while they remain in their place, neither in the possession of the seller nor of the buyer. B: These rules forbid speculation whereby the prices surge up not because of an actual demand or selling of the goods, but because it is meant to cause an increase in price. This is the practice in the stock markets currently. The increase in the prices of crude oil in 2008 is proof of this. C: These rules also prohibit the purchase and sale of the six commodities unless it is with immediate effect, hand to hand transfer, while if it is for the same commodity, the sale will be invalid without the quantities being equal and without immediate transfer of possession. These commodities are gold, silver, wheat, barley, dates and salt. Therefore the selling of these commodities against each other is not valid unless it is done with immediate transfer of possession, and selling of these commodities (the same commodity) is not valid if done without taking possession and with equivalent quantities. For instance in selling of gold for gold or wheat for wheat. Differences in quantity and deferred delivery is not allowed. But the practice in the commodities exchanges is in contravention to this and hence invalid. Any delay in taking possession of these commodities especially during exchange leads to problems. The crises emerge as a result of high volatility, price differentials and deferred possession, driven falsely as possession is not required for initiating the trade. Consequently it becomes similar to gambling and its adverse affects like manipulation of prices, losses and crises are obvious. D: The Shari'ah rules prohibit transactions of shares because the public limited companies and as a result their shares are invalid. These shares are certificates which comprise mixed amounts of permitted (Halal) capital and prohibited (Haram) profits in the invalid contract and transaction where the principal amount and profit get mixed up. Each share certificate represents an equity share in the assets of the invalid company and such assets have been amassed as a result of invalid transactions prohibited by the Shari'ah. This becomes prohibited (Haram) money and the shares of the company would include Haram 80 assets. This renders the shares Haram, whose sale, purchase and transaction is prohibited. This applies both to the ordinary shares as well as to the preferential shares which accrue profits under all circumstances and which have access to priority payment in case of the winding up of the company and disbursement of profits. Similarly, it is also not allowed to purchase shares on interest based loans offered by the share broker or others to the buyer against mortgage of shares itself. This is because it is akin to interest and shares are mortgaged. These actions are prohibited by the Islamic texts for the one who consumes interest, the one who pays interest, the one who records the transaction and the one bears witness to the transaction. It is also not permitted to sell shares that are not owned by the seller and are 'acquired’ by way of the promise of the broker that a loan would be given at the time of delivery of shares. This amounts to selling what is not in possession of the seller (the broker in this case). This prohibition becomes all the more severe when a condition is stipulated that the price is to be paid to the broker so that he gains profits from it through deposit with usury/interest, so he gains money for his lending the shares. It is also not permitted to sell or transact shares because the shares are a debt to the company which invests this money for interest and also because it is prohibited to sell debt with debt. Thus the sale and purchase markets in Islam achieve Halal and secure trade free from the threat of crises, disputes, speculation, gambling and cheating. They are clean markets with clean hands which comply with the rules of the Shari'ah in all transactions.

[@mohammedshaheer1431]

so, we cant buy put options if stock is in downward trend because we are trading options to speculate on price. Isn't it?

[@MohammedIbrahim-sk8wi]

What about selling premiums on good value companies like if it doesn’t expire at the strike price you bought it at you get the minimum credit but id it does u get assigned the shares of the company which is also good too since u believe it’s a good valued company and you don’t mind?

[@ziad4996]

salam is trading company warrant the same as options? is trading warrant halal?

[@almesniliya12lb42]

ANSWER - HARAAM | The Stock Exchanges and the Islamic Perspective In the capitalist system, the stock exchanges play the same role as the interest system which confines and concentrates wealth within a small circle of people. The stock exchanges are even more harmful because they turn the economy from trading in real goods and services to mere numbers and papers from which people profit and incur losses. In this system, wealth is inflated multifold without any real production of goods or services. When the markets rise the people get the illusion that the economic growth is high and similarly when the markets plunge low, people are shocked because their wealth which they possessed or thought they possessed is blown away while the financial speculators take away the real wealth. An ordinary investor makes a profit by buying shares and selling them off when the prices increase, while a speculator earns his profits through the so called short term trading wherein he buys shares and disposes them in order to bring down the prices. Indeed, the stock exchanges and financial markets are the cradles of capitalist crises which leave behind scores of people poorer having exposed them and their wealth to severe losses. However, under Islam the buying and selling markets are regulated by the laws of Shari'ah which are a guarantee against conflicts and ensure that no one usurps the wealth of others by invalid and wrongful means. Some of these regulations are: A: Any goods not owned and possessed by the seller are not allowed to be sold. Therefore any good that has been bought but not taken possession of, is prohibited to be sold. The practice of the stock exchanges is that shares and goods are bought and sold many times over while they remain in their place, neither in the possession of the seller nor of the buyer. B: These rules forbid speculation whereby the prices surge up not because of an actual demand or selling of the goods, but because it is meant to cause an increase in price. This is the practice in the stock markets currently. The increase in the prices of crude oil in 2008 is proof of this. C: These rules also prohibit the purchase and sale of the six commodities unless it is with immediate effect, hand to hand transfer, while if it is for the same commodity, the sale will be invalid without the quantities being equal and without immediate transfer of possession. These commodities are gold, silver, wheat, barley, dates and salt. Therefore the selling of these commodities against each other is not valid unless it is done with immediate transfer of possession, and selling of these commodities (the same commodity) is not valid if done without taking possession and with equivalent quantities. For instance in selling of gold for gold or wheat for wheat. Differences in quantity and deferred delivery is not allowed. But the practice in the commodities exchanges is in contravention to this and hence invalid. Any delay in taking possession of these commodities especially during exchange leads to problems. The crises emerge as a result of high volatility, price differentials and deferred possession, driven falsely as possession is not required for initiating the trade. Consequently it becomes similar to gambling and its adverse affects like manipulation of prices, losses and crises are obvious. D: The Shari'ah rules prohibit transactions of shares because the public limited companies and as a result their shares are invalid. These shares are certificates which comprise mixed amounts of permitted (Halal) capital and prohibited (Haram) profits in the invalid contract and transaction where the principal amount and profit get mixed up. Each share certificate represents an equity share in the assets of the invalid company and such assets have been amassed as a result of invalid transactions prohibited by the Shari'ah. This becomes prohibited (Haram) money and the shares of the company would include Haram 80 assets. This renders the shares Haram, whose sale, purchase and transaction is prohibited. This applies both to the ordinary shares as well as to the preferential shares which accrue profits under all circumstances and which have access to priority payment in case of the winding up of the company and disbursement of profits. Similarly, it is also not allowed to purchase shares on interest based loans offered by the share broker or others to the buyer against mortgage of shares itself. This is because it is akin to interest and shares are mortgaged. These actions are prohibited by the Islamic texts for the one who consumes interest, the one who pays interest, the one who records the transaction and the one bears witness to the transaction. It is also not permitted to sell shares that are not owned by the seller and are 'acquired’ by way of the promise of the broker that a loan would be given at the time of delivery of shares. This amounts to selling what is not in possession of the seller (the broker in this case). This prohibition becomes all the more severe when a condition is stipulated that the price is to be paid to the broker so that he gains profits from it through deposit with usury/interest, so he gains money for his lending the shares. It is also not permitted to sell or transact shares because the shares are a debt to the company which invests this money for interest and also because it is prohibited to sell debt with debt. Thus the sale and purchase markets in Islam achieve Halal and secure trade free from the threat of crises, disputes, speculation, gambling and cheating. They are clean markets with clean hands which comply with the rules of the Shari'ah in all transactions.

[@muhammadnuriman8623]

@@almesniliya12lb42 it's a long talk man

[@ahmredrahman86]

What about buying deep in the money call options as stock replacement method? Also, what about selling puts or covered calls on stocks you own?

[@augy55]

I see you AK

[@munna9642]

Sir, is IQ option halal or haram????

[@shahrukhjsr]

Assalam alaikum, can we trade options in index fund like NIFTY 50, which is not a stock but which constitutes a group of stocks?, kindly answer

[@ahmedjazimismail3569]

Nifty 50 option is a derivative. As per him, it's haram

[@shahrukhjsr]

@@ahmedjazimismail3569 okay thank you..

[@ahmedjazimismail3569]

But i don't think it's haram, if the options are haram due to underlying stock nifty 50 doesn't have any value, Then, gold coin also works in same way, doesn't have any underlying value... It just fluctuates price. But it's not haram. And no big islamic scholars have said it's haram What's your opinion

[@shahrukhjsr]

Watch this...kia online trading jaiz ha by Mufti Akmal....

[@shahrukhjsr]

And I also think that scholars opinion would be better than ours

[@shadabacc3934]

Why background music? Well v informative video

[@khurramhussein]

Please can you inform about Covered Call Options selling?

[@parvezyd]

Do you actually realize that hedgers need speculators to hedge their positions so I am sorry but I don't understand your logic. And your analogy about rocks in the backpack, how is that transfer of risk?. You are merely paying for labour to carry your load. Besides, the guy who carries the load does not take the risk of the price of the rock assuming it has some value. So, I don't get it honestly!!!

[@practicalislamicfinance]

a. its not true that both sides of an option trade can't be hedging their respective risks at the same time. b. if only one side is hedging their risk, this means that no risk creation is happening. sorry you didn't get the backpack full of rocks analogy.

[@parvezyd]

@Practical Islamic Finance to a & b) 1) How can one side be hedging and the other side also be hedging with stocks. The buyer of the protective put is indeed buying downside protection for his long stock position. What position does the seller of the put protecting if he indeed was hedging ?. He is simply betting that the price will not fall below the strike price and he will be able to keep the premium. 2) With all due to respect to your opinion, you are conflating the concept of insurance (compensation for an unforeseen event and protecting downside risk in business (investing). 3) When you invest in equity , you assume the risk of profit or loss and you cannot transfer the risk of loss on someone else. If indeed you are bearish after a long position held in a stock, you should sell it not buy a protective put. Over to you.

[@সাইফমিডিয়া-গ৭স]

@@practicalislamicfinance hlw sir.....please tell me is it haram or halal.....???i don't understand your discussion clearly......so tell me that binary is halal or haram.....???????This answer is very important for me....

[@randomness2615]

Sir, is volatility index halal?

[@tawqirthebuzzerbeater6158]

So like calls are not allowed but puts are

[@Himi5480]

How about trade option like day trading stock so no intention to create risk especially with longer period options and only trade with news and earnings so I just sell the premium to someone who is able to exercise it , only use options for expensive stock where their value won’t drop that much

[@imaltha3]

A very clear explanation! Jazakallah Khairan katsira

[@QuranForTheHearts]

I did not get it? Is it haram ?

[@guywithlesshope356]

is it haram?

[@imtiaziqbal3041]

How does this apply if you operate as an option seller?

[@ggtl304]

Can you do one about fx akhi Insha a Allah

[@tariqahsan1731]

Brother, Your videos are very helpful but somewhat confusing also. I trade credit spreads on stocks and indexes. The risk is defined which I can afford. As in any business there is always and element of risk which comes with the territory. Selling credit spreads is a very low risk activity and generates limited returns unlike buying or selling naked options or owning an stock which can go to Zero too. Please explain if trading credit spreads premissible?

[@DrArifAnwar]

I too have same doubt. Plz explain in spreads with fixed profit and fixed loss can be used.

[@adnanabdurrahman419]

Any option is haram because it involves interest rates.

[@ilmudunia3142]

Salam brother. Please make a video about your opinion on CFD Trading. Thank you

[@practicalislamicfinance]

inshAllah

[@moe6048]

We need more discussion on this

[@thoufeeqshaik]

We useful information brother

[@mhaseeb8015]

Broo i asked about future trading in binance

[@kokngonose]

haram

[@muhammadbakr2783]

Do a video on crypto dual investment that's on binance

[@tab5e53]

I disagree i think options trading in stocks falls under the conditions of gambling as their is no overall benifit of risk transfer. it is a zero sum game. someone is left holding the loss in price. you are by nature betting on the stocks price, which you shouldn't be doing as their is no social value in such a thing. i do think options on commodities only between the actual creator of the commodity and the actual user buyer of the commodities should be allowed only to 1 level. and they need to take possession of the commodities before they can sell it off. repeat selling of the actual contract without taking possession of the actual commodities, to me is nothing more than speculative gambling.

[@bhindigosh1]

Is qyld strategy halal

[@ahmedabushama5381]

If I’m just investing on calls is that also haram ( investing on calls not put) And thank you.

[@MohamedAli-qb6mf]

Is short selling in stocks halal or Haram?

[@practicalislamicfinance]

inshAllah I will address this matter. thanks for bringing it up.

[@MohamedAli-qb6mf]

Looking forward to it

[@firaazfawaz8611]

Mohamed Ali what’s the answer for it. Do you know

[@dannyh1891]

You said options can expire worthless but your assuming people hold their options until expiration date. Alot of traders sell options well before they are due to expire. Also you posted a clip at the end of the video of Warren Buffett. Buffet has made millions by selling puts of companies he wants to invest in. So using him to deter people from options trading is wrong.

[@dianadaniel850]

Yes I agree with u, option works in both way, creating risk, and hedging risk, its not totally gambling

[@CodeUncode9891]

Brother day trading/ speculation is halal or Haram ??

[@practicalislamicfinance]

kzbin.info/www/bejne/iXK4Xn-qebqEqpY

[@tousifkhan7349]

@@practicalislamicfinance h @Practical Islamic Finance *BROTHER I DONT KNOW MUCH ENGLISH CAN U TELL ME SHORTLY THAT BINARY OPTION TRADING IS* HALAL OR HARAM. MUST REPLY BRO PLEASE

[@zebibabuseiry997]

I am lost now so what type of trading is halal?

[@kr6248]

Any type as long as the company does not engage in haram doings

[@shamsulanuar8060]

my 2cents opinion - 1. we should acquire Islamic Finance knowledge ourselves in order to hv confidence in what we do (not taking risks blindly) and clear with the intention (which shd be shariah compliant and related to the real economy)....as otherwise it can be borderline of 'gambling' even if the asset is halal..ie what is the intention of us buying /selling those asset 2. trading - buy/sell options purely based on intention to make profit from it (even on Halal underlying assets) doesn't look like halal based on the above video to me..permissible if it is to protect your halal real economy position. Allah Knows Best...

[@mohammadimthiyaz6053]

How do option. Trading in halal way please guide us

[@vertex_800]

Option selling is halal or haram

[@finkaro]

Riba isn't allowed,Risk is allowed..that doesn't mean buy future options.. Where do not have underlying asset...it's Gambling though..all though People say it's technical skills..if you are buying any stock by understanding the business of the company and if company grows, company stocks Grows ..As have invested by considering the Risk in the business ..i.e Halal business.. it's allowed..in future options.. where is Company.. Where is report to understand the business..So people says Riba is not involved in fno and Risk is there.. which is allowed.. Thats Big Bullshit and interpretation of Hadish.. Don't say we are just passing the Risk to parties.. there has to give and take..in positional trading you see Company may report a number good or bad and you decide..