I want to know if binary options on internet trading broker is Halal?
I want to know if binary options on internet trading broker is Halal?
In the Name of Allah, the Most Gracious, the Most Merciful.
As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.
a binary option is a type of option in which the payoff can take only two possible outcomes, either some fixed monetary amount of some asset or nothing at all (in contrast to ordinary financial options that typically have a continuous spectrum of payoff). They are also called all-or-nothing options, digital options (more common in forex/interest rate markets), and fixed return options (FROs) (on the American Stock Exchange).[1]
Binary options can be bought on virtually any financial product and can be bought in both directions of trade either by buying a “Call”/“Up” option or a “Put”/“Down” option. Binary options are offered against a fixed expiry time.[2]
The most common binary option is a “high-low” option. Providing access to stocks, indices, commodities and foreign exchange, a high-low binary option is also called a fixed-return option. This is because the option has an expiry date/time and also what is called a strike price. If a trader wagers correctly on the market’s direction and the price at the time of expiry is on the correct side of the strike price, the trader is paid a fixed return regardless of how much the instrument moved. A trader who wagers incorrectly on the market’s direction loses her/his investment.
If a trader believes the market is rising, she/he would purchase a “call.” If the trader believes the market is falling, she/he would buy a “put.” For a call to make money, the price must be above the strike price at the expiry time. For a put to make money, the price must be below the strike price at the expiry time. The strike price, expiry, payout and risk are all disclosed at the trade’s outset. For most high-low binary options outside the U. S., the strike price is the current price or rate of the underlying financial product, such as the S&P 500 index, EUR/USD currency pair or a particular stock. Therefore, the trader is wagering whether the future price at expiry will be higher or lower than the current price.[3]
For example, one purchases a binary call option to wager the price of the S&P 500 Index at the strike price of $1400 based on one’s assumption that the S&P 500 will rally above $1400. One chooses a fixed expiry time of 45 minutes with a strike price of $1400. One can invest any amount such as $10 or even $15000. Therefore one invested $150 in the binary call option for $1400. The S&P 500 price at expiry determines whether you make or lose money. Assuming the price after the expiry time was $1402, therefore one would make a profit and also maintain one’s original investment of $150. However supposing the price was under $1400, then one would lose the original investment of $150 altogether. If the price was exactly the same upon expiry, then one would not gain nor lose anything, instead one would receive one’s investment of $150.
Binary trade options are essentially the sale of a right which one party gives to another in return for a fee. The option holder purchases the option to hedge against possible negative price changes in a bid to minimise his loss. Shariah does not recognize the sale of such rights, therefore binary options are impermissible. Furthermore Binary options are impermissible since they contain the element of Gharar (Future Uncertainty).[4]
And Allah Ta’āla Knows Best.
Durban, South Africa.
Checked and Approved by,
Mufti Ebrahim Desai.
لبحر الرائق شرح كنز الدقائق ومنحة الخالق وتكملة الطوري (6/ 80)1.
(قَوْلُهُ وَالْحَمْلِ وَالنِّتَاجِ) أَيْ لَا يَجُوزُ بَيْعُهُمَا، وَالْحَمْلُ بِسُكُونِ الْمِيمِ الْجَنِينُ، وَالنِّتَاجُ حَمْلُ الْحَبَلَةِ، وَالْبَيْعُ فِيهِمَا بَاطِلٌ لِنَهْيِ النَّبِيِّ – صَلَّى اللَّهُ عَلَيْهِ وَسَلَّمَ – عَنْ بَيْعِ الْحَبَلِ وَحَبَلِ الْحَبَلَةِ، وَلِمَا فِيهِ مِنْ الْغَرَرِ.
الدر المختار وحاشية ابن عابدين (رد المحتار) (5/ 62)
(قوله وبيع الحمل) بسكون الميم (قوله وجزم في البحر ببطلانه) «لنهيه – صلى الله عليه وسلم – عن المضامين والملاقيح وحبل الحبلة» ، ولما فيه من الغرر.
العناية شرح الهداية (9/ 108)
قَالَ الْمُغْرِبُ فِي الْحَدِيثِ : ” : وَهُوَ الْخَطَرُ الَّذِي لَا يَدْرِي أَيَكُونُ أَمْ لَا كَبَيْعِ السَّمَكِ فِي الْمَاءِ وَالطَّيْرِ فِي الْهَوَاءِ .

Is Binary Options Halal Or Haram?
Currently almost a quarter of the world’s population is Muslim; there is no doubt about the importance of the role that binary options trading can play in the lives of Muslim binary traders. The general consensus seems to be that binary options trading is permissible to Muslim traders. This is largely due to the fact that trading has always been a way of life for Muslims and the religion Islam has always encouraged Muslims to participate in commerce.
So the question we will explore in this article is, “Is binary options halal or is it haram?” These questions concern the legality of binary options based on Islamic Shariah Law.
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Shariah Law, The Muslim’s way of Life.
The Arabic word “Shariah” in Islam is used to denote God’s divine law which every Muslim has to follow. It is derived from the main tenets of Islam specifically from the Quran and the wise sayings and actions of Prophet Muhammad called the Hadith. Together, Shariah principles dictate the way a Muslim should live his life. They permeate every aspect of a Muslim’s life and regulate the way he should behave in society, in business and with God.
Riba Policy According to Shariah Law.
One of the major tenets of Shariah law is the prohibition of “Riba”. Riba is the Arabic term used to describe interest and is considered one of the major sins in Islam. In an Islamic society, it is encouraged that Muslims should practice selflessness and make sacrifices especially towards those who are less fortunate in life. For example, if a poor individual were to approach a wealthy person for a loan, the wealthy individual according to Shariah law is obligated to provide the loan to the poor individual without imposing interest on the loan. This is in direct contrast with conventional societies where the priority is on personal benefit and self-interest. The differences also apply to the Islamic banking system and to the conventional banking system. With Islamic banking, there is no interest involved. Instead Islamic banking transactions are based on 2 types of mutually beneficial arrangements called Mudharabah and Musharakah.
Mudharabah Arrangement.
In contrast to conventional banking where you have the applicable charges and interest rate explicably stated, a Mudharabah arrangement does not have any interest involved. Basically the bank enters into a profit sharing partnership with the investor (depositor). Because this is a partnership, the investor will also bear a portion of the losses if the investment is a failure. In essence, it is just like any ordinary partnership deal except that it extends to the relationship between a bank and an investor. In other words, a Mudharabah arrangement allows Muslims to lend out their money in return for a profit just like conventional banks pay out interest to their depositors. The key difference is the Mudharabah arrangement does not have the interest or charges explicitly stated like a normal arrangement. In addition, both parties to the Mudharabah arrangement share the profits and the risk of losses together.
Musharakah Arrangement.
The Musharakah arrangement is similar in concept to the Mudharabah arrangement except that the roles are reversed. With the Mudharabah arrangement, the bank which enters into a joint venture with an individual or company is the investor. The profits under this arrangement are divided in accordance to the amount of capital that is contributed. The so-called “interest” earned by the bank is actually the profits from the enterprise or joint venture between the bank and the second party. Once the loan amount has been fully paid up, the Musharakah arrangement will end between the bank and the individual. The Musharakah arrangement is usually adopted when an individual wishes to take out a mortgage to buy a property. With mortgages taken out under the Musharakah arrangement, the buyer enters in an arrangement with the bank to buy the property for a share of the rent paid by the occupier of the property which in this case is also the buyer. Just like a normal loan agreement, the term of the partnership will be clearly defined at the start of the partnership arrangement.
The idea of Islamic banking was only introduced into mainstream banking during the last decade when the UK began to adopt the concept of Islamic accounts. The idea behind Islamic accounts was to enable Muslims to comply with Shariah law while they deal with the conventional financial banking system. Given the fact that the growth rate for Islamic accounts is thrice as fast as traditional bank accounts, many financial services providers have also began to adopt the idea of Islamic accounts to serve their Muslim clientele better.
Binary Options Islamic Trading Account.
Given the fact that a substantial number of financial traders are Muslim, Forex and Binary options have also started to offer Islamic trading accounts over the last years. These accounts are tailored specifically for Muslim traders and are interest free. A Muslim trader trading with an Islamic trading account will have access to all the trading assets that other types of trading accounts have with the difference being no interest charged on overnight positions. There is also no additional penalties or charges which Muslim traders have to pay for trading with the Islamic trading accounts. Typically, these Islamic trading accounts are characterized with all features listed below:
Ability to trade with all the assets offered by the broker All market positions are closed by 23:59:59 Broker operate on “Hiba” policy meaning the broker will “donate” as a charitable gesture to Muslim traders “loaning” the broker’s money to trade No hidden charges No interest charged on overnight positions No swap commission Shariah compliant trading account Transparent.
Q: Is binary options trading Halal?
Answer: Many traders are Muslim and therefore brokers have come up with a way to make this kind of trading halal. This means they do not charge interest on any positions held open.
Q: If there is no interest involved what is the structure of the trade?
Answer: Instead Islamic banking transactions are based on 2 types of mutually beneficial arrangements called Mudharabah and Musharakah. With Mudharabah the bank enters into a profit sharing partnership with the trader. As it is a partnership, the investor will also bear a portion of the losses.
With Musharakah the profits under this arrangement are divided in accordance to the amount of capital that is contributed. The so-called “interest” earned by the bank is actually the profits from the enterprise or joint venture between the bank and the second party.
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Binary Options Brokers With Halal Islamic Accounts.
Many people who enjoy binary options trading are of the Muslim faith, so it is easy to see why one of the main questions raised about trading with brokers is whether or not it is something that is compatible with Muslim traditions. The increase in online trading has only served to raise the profile of the issue of whether or not this activity is Haram or Halal, since around a quarter of the global population is currently Muslim.
Those who follow the Islamic faith must follow Sharia Law which governs all aspects of life from economic issues to social matters. When it comes to finance and banking, it is forbidden by Sharia Law to charge interest or "Riba" as it is considered to be a sin. Instead, Halal investments are led by a "risk sharing" concept using the principles of Bai’ al ‘inah (which is a sale and buy back agreement), Bai’ muajjal (which is a credit sale), Bai’ bithaman ajil (or deferred payment sale), Bai salam, Mudarabah (or profit share), Musawamah and Murabahah.
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How Does Sharia Law Apply To Binary Options Trading?
When it comes to trading in binary options, Sharia Law requires that no interest can be charged or earned on an overnight position. However, with trading being done on a 24 hour basis, usually daily interest is added to a broker's account, and whether or not the broker then credits or debits the trader's account with interest, the very fact that this interest is payable or earned in a trading transaction results in the trade being Haram in a Muslim's eyes.
To make trading accessible to Muslim clients, many brokers have now developed a Swap Free account which eliminates the concept of Riba from trading. Instead of using an automatically rolled over open market position which would make overnight interest payable, with this account type, any open position is closed by 17:00 New York time and reopened again immediately, thus avoiding paying any interest on the new 24 hour cycle. An Islamic account must meet these conditions:
Immediate trade execution Immediate transaction cost settlement No payable interest on trades.
It is important to note however that some Muslims still consider trading to be Haram as they believe it to be gambling. Also, as every trade or contract must have a loser and a winner, some Muslims think that as both parties cannot make a profit from the trade it is also not a suitable activity under Sharia Law.
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Is trading binary options halal

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Is Binary Option from an Islamic account (No riba and swap-free) halal or haram?
lately I discovered the Binary Option system, with a little bit of research I found companies who offer an Islamic Account to trade.
However when I searched on the internet to find if this kind of trades is Halal or Haram, I found myself stuck between two opinions, some say that it is halal if you avoid trading in currencies, you trade just in commodities (gold, silver, oil), stocks (Facebook, Amazon, Apple) and indices, and some say that it is Haram.
The problem is that no one is talking about the Islamic account itself, whether it makes any difference or not.
Some sites that offer an Islamic account:
Could anyone please help me with this?
The problem with Binary options(also options and futures) is that you don't directly deal with the underlying item. You never become the owner of the underlying item. Instead you are betting on the way the underlying item's price moves. If you predict the movement correctly you get money and if you predict wrong you lose money. So I think it is pure gambling.
Binary option is not Haram essentially. I don't know how much you have studied this system, but please note that in this system 30 percent of the people will get rich and about 70 percent will lose. From any side you look at these binaries you can find out this. This kind of trading is not Halal because of what I mentioned.
In my country, Ulamas have forbidden this kind of trading.
Well, i think binary options IS gambling, there's a thin line between binary options and forex trading (gambling and trading) binary options are about betting and forex trading is about selling and buying currencies. Binary options : is betting wethere bulling or bearing Forex trading: is buying and selling currencies with the hope that you earn money As i mentioned above, if we talk about fundamentals about trading, there's a very thin thin difference between betting and trading. In simple and common trading (such as trading or buying food) the wholesale sellers try to take profit of the market volatility so they try to "predict" proces. But betting you know is to bet is giving money without buying something I consider binary options like betting for football .. The fundamental difference between betting and trading is almost same between business and ribah (in quran' they said ribahis business, allah said NO) Therefore i consoder binary options haram (not fatua) and to prevent doing things haram i prefer avoid dealing with subjects still in discussion until a real FINAL result or fatua is released Ua allahu aalam Assalami alaikom.
It is interesting to note that claims of 100% are made by those who can not justify it.
It is my understanding that for a method to be gambling a stake has to be made which has risk to be lost.
In binary trading it is gain or no change ie zero gain; nothing is being lost therefore not gambling in Islam therefore halal.
Non Muslims such as HMRC, for tax purposes, classify it as gambling based on behaviour not the exact detail.
Al hamdu Lellah wa asalatu wasalam ala raoulelah, in my view, as for all muslims Buying and Selling is NOT haram, But Al Riba is haram (as the Quran says). So in my points here I will never Change Haram thing to halal. nor vice versa.
I will simplify my answer in to points :
What you buy you should be able to touch or hold in your hand or be in your A/C To Buy Stocks.. it's a tangible item. to buy Gold it's Tangible. any commodity will be tangible ! So you GOT to touch it, in order to own it. Trading in commodities or Stocks are not allowed (Haram) bcz you cannot hold it, then you sell it . it's not possible - you just don't even see it . Trading in Currencies is Halal and allowed in islam, because you can see it coming in to your A/C and stored there, you can withdraw it anytime and touch it or hold it 100%. Because it's currency of other countries same as exchange outlets which is spread over the islamic world and halal 100%. Second to point 4, the give and take or sell and buy is done on the same session (same time when the trade ends, it's in your balance instantly) and this balance BELONGS only to you, you can withdraw anytime. Islamic A/C should be Free of the following : A. Interests on Trades. B. Swap interests on overnight trades (Rollover). C. Deposit Bonus (Which is added without sense) Ribah. D. No Deposit Bonus (Which is added without need to deposit usually). E. Hidden Fees you don't realize. F. Leverage (the riser of funds as loan from Banks to your A/C) If you have your a/c islamic means free of the above, Provided that you Trade ONLY in Currencies exchange, means it will be Halal to practice. Wallahu A'Alam.
Another point: Binary options or Forex Trading are NOT Gambling, why ? Because gambling has 3 conditions: 1. Pay for something symbolic like Marks to play with (literally something without any value). 2. Get your Play or cards flip or Roulette Turn. 3. Get a Prize for your play (determined by the Casino) But in Trading . you are Buying an item or Currency of REAL Value. Opening a position (Selling it or Buying it with a real contract) and winning sale price on the spot after sale and it's in your A/C. so it's totally different and Halal. Wallahu A'Alam.
There is so many stories about betting in Islam about different stuffs but not for trading and betting is gambling but in religions the messengers always has predicted about thing to happening so what is that , in my opinion when you deposit some amount to investment as a business and when you think the line will go there that you see predictly so if you profit its the way you and all the members hidden betting for so halal is the clean result so its halal a strategy is the way that you will be agree for lose or win basically its a systematic trade its not the poker or killing someone for their pocket money its a nice live trade for stocks wars and we should know that life is balanced by the wars of stocks and in this case god will thank you that if you invest some money for a reason that it balancing the stocks and the human life system going forward normally so you can trade in law binary options are allowed in professional countries you can be a millionaire and enjoy if you are Islam for the humanity. It's 100% halal!