FINANCE

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KembaraXtra – Islamic Derivatives: Can Call Option and Put Option Exist in the Same Contract?


🔹 Short Answer
 
👉 Yes, they can — but it depends on how the contract is structured.


🔹 1. Separate Contracts (Most Common)
 
Usually:
  • A call option and a put option are two different contracts
 
Example:
  • You buy a call option (right to buy)
  • Someone else buys a put option (right to sell)
 
👉 These are normally not combined


🔹 2. Combined in One Strategy (Yes, Possible)
 
Sometimes, both are used together in a strategy, such as:
 
🔸 Straddle Strategy
  • You buy:
    • 1 call option
    • 1 put option
  • Same asset, same strike price, same expiry
 
👉 You profit if price moves a lot (up or down)


🔸 Scenario (Palm Oil 🌴)
  • Strike price = RM4,000
  • Buy:
    • Call option (premium RM50)
    • Put option (premium RM50)
 
👉 Total cost = RM100
  • If price rises to RM4,500 → call option profits ✅
  • If price drops to RM3,500 → put option profits ✅
 
👉 You win if the market moves significantly


🔹 3. In One Contract (Rare/Structured)
 
Some financial products may combine both rights in one contract, but:
  • This is more complex and structured
  • Not common in basic trading


🔹 Shariah Perspective (Important)
  • Combining both often increases:
    • ❌ Speculation
    • ❌ Uncertainty (gharar)
  • So it is generally not acceptable in Islamic finance


🔹 Simple Summary
  • Usually → call and put are separate contracts
  • Can be combined → in strategies like straddle
  • Same contract → possible but uncommon
  • Islamic view → ❌ generally not permissible
 

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