You consider yourself a good Muslim who would never gamble or do business that every Muslim knows is haram or forbidden. But you also want to earn money quickly. Well, you’re lucky or at least a few Israeli companies would like you to believe that. Are binary options halal?
Are Halal binary options consistent with Islamic traditions?
This has become an important question for potential Muslim option traders because the financial industry has become available to everyone through online trading accounts. Here, we’ll look at the implications of Sharia law for binary options trading and whether it is ‘Halal’ or ‘Haram’. The development of online trading in the financial industry over the past two decades has opened new horizons for retail traders of all races and denominations. Since a quarter of the world’s population is Muslim, it is inevitable that more and more Muslim traders are joining the online scene of binary options trading in Islam. In Islamic economic case law or Sharia law, the charging of “Riba” or interest is prohibited and is considered a major sin. Many brokers sensing an opportunity that will benefit them, as well as their Muslim traders came up with the idea of ”Halal” or Islamic commercial accounts.
What do Muslims say?
We mentioned a very short summary of binary options definitions and their types. However, it gives us a clear picture that the main idea around which stock markets revolve is to make a profit, whether it is at the expense of others or with the help of luck, risk and gambling. These markets are not based on Islamic or moral foundations; rather, they are the result of free ideas for finance, the main focus of which is only to raise money by all possible means […] Therefore, the binary options in their current form do not meet Islam’s requirements, such as the real existence of what is contracted or which the seller describes [based on his moral responsibility]
Is gambling a binary option?
Let’s start with the gambling issue. Every time you risk getting an uncertain result, you play technically. This means that it can be argued that all investments are a form of gambling. That said, few Muslims will follow such a strict definition. Everyone must at some point invest in one way or another, financially or otherwise. Invest natural persons. Governments invest. Companies invest. Organizations invest. For this reason, it can be argued that whether we define something as “gambling” or “investment” has less to do with risk and more with what is being done to minimize this risk.
Professional investors use strategies to manage their money and plan their transactions in such a way as to reduce risk as much as possible. In this way they can often achieve relatively stable results over time. If you approach binary options transactions without strategy, without any testing and without a logical basis for your trading decisions, you definitely play, which is very haram. But if you approach binary options trading with a systematic plan that you have thoroughly tested and which can help you minimize risk, you invest like a pro. At this point, you can say that your trade is halal.