Binary options halal or haram?

Binary options are one of the new and unusual investment derivatives of a kind, and they contain fixed risks and high financial returns in a limited time in the sense that it is a contract that gives the buyer the right but not the obligation to buy or sell a financial asset at an agreed price in a predetermined period, and binary options allow trading on Forex currency pairs, stocks, indices and commodities in the commodity markets.

How does binary options trading work?

For an option contract, the buyer must expect a movement or change in the value of a specific asset or commodity and expect its result either to rise or fall by pressing (call) to sell or (put) to buy in a specified and agreed period of time, usually the shortest period It is (a minute) and the largest period is (a year) according to the choice of the investor or the buyer of the options contract.

The mechanism of action is as follows: If the asset or bond moves in the direction chosen by the trader during the expiry time or the time period, he automatically wins and gains. If the asset or bond moves in the opposite direction and the trader’s prediction fails, he will lose.

What if the price did not move down or up and the time ended on this stability? In this case, the relevant trade is automatically canceled because there was no result and therefore there is no loss or profit.

Let me give you an example to make it more clear:

Suppose you made an account in one of the companies working in this field, which is binary options, and then deposited an amount, for example, $100 in your account to start your first steps. Here, the value of the deal is determined, for example, the value of 10 dollars and the profit rate is 75% of the value of the deal according to your choice, if you choose the time period of 30 seconds and expect the trend to be a downward trend according to your vision of the price movement in front of you on the chart.

If the prediction is in your favor, you will win 75% of the value of the invested amount, which is $10, for example, that is, you win $7.5, and this is simply the definition of binary options and their mechanism of action. But in the event that your expectation of the price is not in your favour, you will lose the value of the contract, which is here in the example $5. Drawn, i.e. neither win nor lose, and it is cancelled

That is, you win or lose based on your expectation of the price movement and the tools you use to find out if the price will go down or up during the specified time period.

Advantages of binary options

1. Achieving a very fast income and profit in the shortest time that may reach 50, 75 or 100% of the value of the transaction, and this is a very special thing. You may not find any other financial instrument without a doubt.

2. The calculated little risk, which is the value of the deal, which you determine the amount of. You cannot lose more than you specified for the deal, meaning that in the case of profit, you may profit twice the value you specified, and in the event of loss, you will not lose more than what you risked and determined in advance.

3. The expiry time of contracts ranges from 30 seconds up to one year, meaning that you can only within half a minute get a profit of up to 100% of the investment amount, such high profits are not available in any other financial instrument.

4. Simple minimum investment, from It is possible to start with a very small amount, and in companies that accept opening an account of $200, and there are companies that accept less than this, and the minimum amount to open the deal is as desired, and the minimum is $1 in some companies, and you can hold an unlimited number of deals throughout the day as you wish as long as the money deposited in your account allows a contract Transactions do not have a limit.

5. The fixed risks in binary options contracts make this investment a specific form of risk as you will not lose more than the value of the deal and this is completely different from Forex or the stock market.

6. There is no spread or commission, It is (the difference between the purchase price and the selling price) and it is applicable in most financial assets or currencies that have a purchase price and a selling price or gold as trading. In binary options, you can also trade currencies, but without spreads, as the whole process is the value of the transaction.

7. Contracts allow diversification of the investment portfolio, as it is possible to deal in currencies, futures, commodities, oil, gold and other assets. You only have to expect the price movement in the time range you choose.

8. transparency and simplicity, As we mentioned, there are no hidden fees or commissions in excess of the amount you decide for the deal, and no spread, even if you choose a longer period of time, and this is an advantage that may suit some only. Contract that’s it.

What is the difference between forex trading and binary options?

We can consider binary options as derivative contracts, meaning that the result of their trading depends on the price in the financial instrument or the underlying financial asset, that is, if you are trading on the price of the Euro-dollar, the price in forex will be the same as the price in binary options without any difference, and therefore these contracts may be derived From the forex market or from the stock markets or others, but different returns are given from those in forex and at the same time the different type of risk in terms of potential return and inevitable risk, and the result of trading binary contracts depends on the price of the financial asset after a period of time, which is predetermined in the binary options contract Unlike forex, the trader is the one who chooses to get out or stay.

How to trade binary options

Most companies working in this field offer a demo account (demo) for trading and give you a virtual balance for trading and measure your prediction skills before you start opening a real account with the experience of the company’s services, and some companies also give a bonus feature on your deposits as a bonus on your deposits in order to encourage trading with larger amounts .

There is no doubt that binary options have a lot of advantages and also have some things that some see as inappropriate, but there is the most important question that comes to the minds of many.

Are binary options halal or haram?

Many Islamic parties have issued a fatwa that it is not permissible to trade options contracts in general, including binary options, as some of the mujtahids consider this type of contract as a gharar contract or a possibility contract, since neither party to the contract can determine the final price or the final value of the contract and the probability The gain or loss in this contract depends on an uncertain occurrence of the rise or fall of the price movement, which makes it invalid according to Islamic jurists, and as a result of the uncertainty of the final value is a reason for the invalidity of the contract according to the mujtahids in Islam.

A decision was issued for this by the Islamic Fiqh Academy, as if the direction of price change was known in advance, the contract would not have been concluded, because it would represent a real loss for one of them, so choices are tools for risking prices. This is in contrast to the operations of buying and selling shares that do not involve a legal prohibition, because the contract of sale is an immediate contract that ends as soon as the deal is concluded, so each party is completely free to act after the contract, without any obligation from one of the parties to the other, and the selection contract is a deferred contract in which one is obligated The two parties to the other bear the price risk during the term of the option. The reality of the contract is that the issuer of the option provides a commitment or guarantee to the other party to implement the contract at the agreed price, and we found it necessary to clarify the opinion of the debt on the matter.

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