Are options, CFDs and short selling halal?
Here the problem is not riba but uncertainty and speculation. An option premium buys a bare right, which is not property that can be sold, and most options end as bets on price moves. A CFD settles only the change in price with nothing bought or delivered. Short selling sells what you do not own. The OIC Fiqh Academy and AAOIFI do not allow any of them.
The guidance
I want to trade derivatives or bet on falling prices. What is the trade?
- I trade options: the right to buy or sell later at a set priceHaram · Gharar & gambling · OIC 63The problem here is not riba but uncertainty and speculation. The premium buys a bare right, which is not property that can be sold, and most options end as bets on price moves. The OIC Fiqh Academy and AAOIFI do not allow them.
- I trade CFDs: I bet on the price difference without owning anythingHaram · Gambling & riba · Qur’an 5:90A CFD settles only the change in price. Nothing is bought or delivered, so it is a wager. Holding one overnight usually costs interest too.
- I sell shares I don’t own, borrowed from my broker, to buy back cheaperHaram · Selling what you don’t own · OIC 63The Prophet said: do not sell what you do not have. Short selling sells borrowed shares and usually involves interest as well.
- I buy real shares with my own money and hold themHalal · Equity · AAOIFI 21Owning what you buy, with your own money, is ordinary investing, subject to the halal screens in Buying shares.
People also ask
Are stock options from my employer halal?
Employee share options are a promise from your employer, not a traded contract. Exercising them to buy real shares in a halal business is allowed; trading the options themselves is not.
Is crypto futures or leveraged trading halal?
Leveraged and futures trading combine a loan from the broker, interest on overnight positions and a bet on price differences without delivery. Not allowed. Buying an asset outright with your own money is a separate question.
What does “do not sell what you do not have” mean?
The Prophet forbade selling what you do not possess. Short selling sells borrowed shares to buy them back cheaper, and usually involves interest as well.
Related questions
All questionsThe four schools on riba
This guidance follows the Hanafi school as applied today by Mufti Taqi Usmani and the AAOIFI standards. Notes mark where the Maliki, Shafi’i or Hanbali schools differ. The four schools on riba →