Darul Ifta, Darul Uloom Azaadville

Is it permissible to do option trading?

Published as ETF and Option Trading

· 16 Dhuʻl-Qiʻdah 1442 AH1 min readEnglish

Question

Is it permissible to invest in ETF?

Is it permissible to do option trading?

Answer

ETF (exchange-traded fund) is a type of investment fund and exchange-traded product, i.e., they are traded on stock exchanges.

An option is a contract giving the buyer the right, but not the obligation, to buy or sell an underlying asset (a stock or index) at a specific price on or before a certain date (listed options are all for 100 shares of the particular underlying asset). An option is a security, just like a stock or bond, and constitutes a binding contract with strictly defined terms and properties.

Investing on the stock market is a controversial issue amongst the Muftis. Some of them permit investing on the stock market and others don’t. However, our Darul Ifta does not approve investing and trading on the stock market.

In conclusion, we advise you to abstain from trading on the stock exchange whether directly or via a company that will be investing or trading on the stock exchange on your behalf.

References (Arabic / Urdu sources)

https://en.wikipedia.org/wiki/Exchange-traded_fund

https://www.stockmarketloss.com/practice/options/

Approved by
Mufti Muhammed Saeed Motara Saheb D.B.
View original Compare with other Darul Iftas
Questions about this ruling, answered only from the archive with sources.

Where scholars differ, it’s safer to take the more cautious view.

Fatawa SA is an independent, read-only index of fatawa already published by Darul Ifta, Darul Uloom Azaadville. It is not a fatwa service. For your own situation, please ask a Mufti. Report an issue

For corrections or mistakes, please email us at fatawasa786@gmail.com.

Source: Darul Ifta, Darul Uloom Azaadville — https://www.iftadua.co.za/etf-and-option-trading/6477/
Fatawa SA: https://fatawa.co.za/fatwa/azaadville-6477

People also ask

Are unit trusts, ETFs and Sharia funds permissible?

“1. Assuming that the unit trust is Shariah compliant, Zakaat is payable on the current market value of the Zakaatable assets only. It will therefore be correct for you to deduct non-Zakaatable assets before calculating your…”

Ibn Masood · 12 fatawa from 4 Darul Iftas on this

What the Darul Iftas say

Related fatawa