Could you please explain, with clear evidences, whether the practice of buying and selling in financial markets or products depending on their future values is allowed according Islam or not. It is referred to as spread betting, but it is not the like of betting on games such as football, etc. You can read more about it here: http://www.finspreads.com/spread.asp
If it is not allowed, and if one’s business and only source of income comes from this, what would you recommend he do?
Also, if it is haram, would one be allowed to accept money as a gift from one who conducts such business?
I look forward to reading your convincing response.
According to our understanding, you are referring to the option of either purchasing (call) or selling (put) an item in the future based on the difference between the exercise price (agreed purchase or selling price) and the market price.
If one profits through the exercise price either by purchasing or selling shares, one exercises that option or else he forfeits the option. A price is paid for the option namely premiums. According to the Shari’ah, the purchase of options is not Maal (commodity) and is not permissible. Furthermore, it has the element of gambling (Qimaar) in it. Effectively, the option purchaser and the company enters into a bet. If the exercise price is better, the option purchaser wins the bet or else he loses and the company wins the bet. This is not permissible.
and Allah Ta’ala Knows Best
Mufti Ebrahim Desai