Islamic Derivatives – Insurance vs Hedging vs Risk Management
Islamic Derivatives – Insurance vs Hedging vs Risk Management ⸻ A. Takaful (Islamic Insurance) * ✔️ Permissible alternative to conventional insurance * Based on: * Mutual cooperation and shared risk...
Islamic Derivatives – Do Buyers Have to Receive the Commodity?
Islamic Derivatives – Do Buyers Have to Receive the Commodity? A. Theoretical Rule (Yes) - In a futures contract: - Buyer = obligated to receive the commodity - Seller = obligated to deliver - So...
Islamic Derivatives – Futures Contracts
Islamic Derivatives – Futures Contracts (Complete Notes) A. Basic Concept - Futures contracts are similar to options, but with a key difference: - Options → right (no obligation) - Futures → obligation...
Islamic Derivatives – Prohibition of Maisir, Gharar & Dayn bi-Dayn
Islamic Derivatives – Prohibition of Maisir, Gharar & Dayn bi-Dayn ⸻ A. Core Shari’ah Principles Affecting Derivatives * Shari’ah imposes key restrictions that impact financial instruments: * ❌ Cannot sell what you do not own → prevents short selli
Islamic Derivatives – Issue of Ikrah in Stock & Options Trading
Islamic Derivatives – Issue of Ikrah in Stock & Options Trading A. Concept of Ikrah - Ikrah = coercion or compulsion in a contract - Occurs when: - A party is forced to enter a contract, or - Conditions...
Islamic Derivatives – Are Derivatives Allowed for Hedging?
Islamic Derivatives – Are Derivatives Allowed for Hedging? A. Important Distinction - ✔️ Hedging (risk management) → generally a valid objective in Islam - ❌ Conventional derivatives → often not permissible...
Islamic Derivatives – Hedging, Insurance & Speculation
Islamic Derivatives – Hedging, Insurance & Speculation A. Core Issue - Main debate around derivatives: - Are they risk protection (hedging/insurance) - Or speculation (profit from uncertainty)? B....
Islamic Derivatives – Risk Management vs Insurance
Islamic Derivatives – Risk Management vs Insurance A. Why They Seem Similar - Both aim to: - Reduce or transfer risk - Example: - Insurance → protects against loss - Hedging → protects against price...
Islamic Derivatives – Hedging vs Insurance
Islamic Derivatives – Hedging vs Insurance A. Your Statement (Refined) - ✔️ Hedging is similar to insurance in purpose - Both aim to protect against risk - ✔️ Hedging can be allowed in Islam - BUT...
Islamic Derivatives – Warrants
Islamic Derivatives – Warrants ⸻ A. Definition * Warrants = derivative securities * Their value is derived from an underlying asset (usually shares) * Give holder: * Right (not obligation) to buy shares * At a fixed price * Within a spe