Will Binary Option trade permissible in the following case?

Answered according to Hanafi Fiqh by Askimam.org

I had already gone through this article : http://www.askimam.org/public/question_detail/31113 . However i would like to know if when i make a trade on binary option and i request a payback of e.g 15% in case of loses. Will it still be haram as it won’t be the same situation. The prior situation is that either i gain or i lose everything, But on the other scenario i’m presenting , even in loses i will be able to gain some of my investment back.

Moreover, when doing the transaction , if i take all the precaution to analyse a market prior and then made up my mind to persue with that trade , in simple words , it won’t be a guess or by chance, instead it will be a decision took based on facts. Kindly please provide me more information about it.

Answer

In the Name of Allah, the Most Gracious, the Most Merciful.  

 

Assalāmu ῾alaykum wa Rahmatullāhi Wabarakātu

 

Binary options trading is a financial mechanism of trade in which there are only two possible outcomes, either you earn a profit or loses your full investment. [1]

 

In this mode of trade, one enters into a contract based on a future uncertain event. This is known in Shariah as “Gharar” (uncertainty). Any trade that contains the element of Gharar (uncertainty) is not allowed in Shari’ah.

See the following Hadith; 

 

قَالَ: «نَهَى رَسُولُ اللهِ صَلَّى اللهُ عَلَيْهِ وَسَلَّمَ عَنْ بَيْعِ الْحَصَاةِ، وَعَنْ بَيْعِ الْغَرَرِ»

Abu Huraira (Allah be pleased with him) reported that Allah’s Messenger () forbade a transaction determined by throwing stones, and the type which involves some uncertainty.(Muslim,1513)

 

Therefore, entering into such dealings in the first place will be impermissible. The pay back option will not change the prohibition .It still remains a transaction based on a future uncertain event even though one applies all his skills in avoiding a loss.[3] 

 

And Allāh Ta῾āla Knows Best

Wassalāmu ῾alaykum 

 

Jibran Kadarkhan

Student Dārul Iftā

Mauritius

Checked and Approved by:

Mufti Ebrahim Desai

 

 

[1] http://www.dailyforex.com/Binary-Options

      http://www.investopedia.com/terms/b/binary-option.asp

[3] 

(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

 البحر الرائق شرح كنز الدقائق ومنحة الخالق وتكملة الطوري (6/ 80)

 

 

 (قوله وبيع الحمل) بسكون الميم (قوله وجزم في البحر ببطلانه) «لنهيه – صلى الله عليه وسلم – عن المضامين والملاقيح وحبل الحبلة» ، ولما فيه من الغرر

 

الدر المختار وحاشية ابن عابدين (رد المحتار) (5/ 62)

 

 

قَالَ الْمُغْرِبُ فِي الْحَدِيثِ : ” { نَهَى عَنْ بَيْعِ الْغَرَرِ } : وَهُوَ الْخَطَرُ الَّذِي لَا يَدْرِي أَيَكُونُ أَمْ لَا كَبَيْعِ السَّمَكِ فِي الْمَاءِ وَالطَّيْرِ فِي الْهَوَاءِ        .

  العناية شرح الهداية (9/ 108)

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