Is Options Trading Halal? (2024)

Aug 22, 2023 by 500 Words Magazine -

Binary options trading is quite the puzzle for the Islamic society. The biggest question is whether binary options trading is halal, or lawful or permitted under Islamic law, and is this kind of trading allowed by Sharia, the Islamic religious law. Traders Union experts sought an answer to this question.

Binary options trading provides wider opportunities for investors. This instrument has long been recognised in developed markets and is used by many traders. According to Investor.gov, a binary option is a type of options contract in which the payout depends entirely on the outcome of a yes/no proposition and typically relates to whether the price of a particular asset will rise above or fall below a specified amount.Once the option is acquired, there is no further decision for the holder to make regarding the exercise of the binary option because binary options exercise automatically.Unlike other types of options, a binary option does not give the holder the right to buy or sell the specified asset.When the binary option expires, the option holder receives either a pre-determined amount of cash or nothing at all.

The lack of the answer to the question: “Is options trading Halal?” impedes on the popularity of this instrument on Islamic markets. It is still not clear whether binary options trading is allowed by Sharia. Some people believe it is haram, or forbidden orproscribedby Islamic law. At the same time, many believe that binary options trading is halal, if an investor recognises the risks involved. Analysts of Traders Union, a financial portal providing traders and investors with necessary information to make their endeavors in the financial markets profitable, researched the intricacies of this issue.

How can you tell whether binary options trading is halal?

Binary options trading is based on predicting the movement of an asset price. If an investor’s prediction is correct, he earns a profit. If the prediction is incorrect, the trader will end up losing his investment. It is a high-risk instrument, and there is no third outcome option. This is what confuses traders in Islamic markets. Some investors believe this type of trading is haram, as it is similar to gambling at a casino.

However, supporters of binary options deny similarity with gambling, because predicting an asset price movement implies a certain level of skill. The other factor in favour is that many countries with Islamic traditions, such as Saudi Arabia, UAE, Turkey and Pakistan, have allowed binary options trading.

Top eight apps for binary options trading

Traders Union experts selected eight bestbinary options apps, offering users access to binary options trading of a wide range of assets:

1. Pocket Option
2. Raceoption
3. IQcent
4. VideForex
5. Binary.com
6. IQ Option
7. ExpertOption
8. Binomo

Using these mobile apps, investors can trade whenever and wherever they want. The demo accounts for beginners provide an opportunity to learn and practice binary options trading before investing your own money.

Disclaimer:This press release from AB Newswire on behalf of Traders Union.

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