Are binary options halal?


#1

When we talk about halal investment the two main ones are Musarakah and Mudarabah. In Mudarabah, one party invest and the other party manages the investment. In Musharakah, two or more parties provide the capital and one or more parties manages which sometimes also include sleeping parties. A binary option is an option where there are only two possible outcomes, either some fixed monetary amount of a certain asset or nothing at all. Binary option can be bought on nearly any financial product and can be brought in direction of the trade; call(Up) option or put(down) option. Call and put options are not recognized rights in Sharah and are also not recognized mal or wealth, so it can not be exchanged nor sold. Also when the options are exercised, the way its exercised is not shariah compliant. Binary Option normally has a fixed maturity date. Shariah laws strictly prohibit the loaning of cash with premium or interest. Investments in the Muslim world are rather administered by the idea of “risk sharing” through principles such as Bai’ muajjal (credit sale), Bai salam, Mudarabah (profit sharing), Murabahah and Musawamah. When Shariah law is connected to Binary options trading, it implies that the premium is earned or charged for an overnight position which is prohibited. Despite whether the parallel specialist charges or acknowledges their customers’ records for the premium like forex handles, the way that premium is earned or payable amid an exchange making the exchange “haram” in Islam. This circumstance puts Muslim brokers on a crash course with their religious beliefs. Binary options are not any recognized wealth or mal from shariah perspective thus any sell of it is prohibited.

Source: islamqa.org