Islamic Derivatives – Stock Options
Islamic Derivatives – Stock Options ⸻ A. Definition * Stock options = contracts giving the holder: * Right (not obligation) to buy a fixed number of company shares * At a fixed price (exercise/strike price) * Within a specified time period
Islamic Derivatives – Options
Islamic Derivatives – Options ⸻ A. Definition of Options * Options are contracts giving the holder the right (not obligation) to: * Buy or sell a specific amount of a security * At a fixed price * Within a specified time period ⸻ B. Key T
Islamic Derivatives – Combined Options
Islamic Derivatives – Combined Options ⸻ Use of Combined Options * Businesses use: * Call + Put options together * Purpose: * Hedge risk from: * Currency fluctuations (e.g. USD) * Commodity price changes ⸻ What is a Combined
Islamic Derivatives – Introduction
Islamic Derivatives – Introduction * Futures contracts = agreements to fix prices before actual delivery of goods/services * Used by producers & commercial operators to manage transactions in advance * Key benefits: * Reduce multiple types of risk (
Islamic Derivatives – Issues with Futures Contracts
Islamic Derivatives – Issues with Futures Contracts * General view: * Muslim scholars have differing opinions * Many argue futures contracts do not fully comply with Shari’ah principles ⸻ 1. Absence of Countervalues at Contract Stage * No imm
Islamic Derivatives – Bai al-Kali bil-Kali (Debt for Debt)
Islamic Derivatives – Bai al-Kali bil-Kali (Debt for Debt) * Definition: * Bai al-kali bil-kali refers to: * A transaction where both countervalues are deferred * In simple terms: exchanging one debt for another debt ⸻ * How it work
Islamic Derivatives – What is “Debt” in Islam?
Islamic Derivatives – What is “Debt” in Islam? * Basic meaning: * Debt (Arabic: dayn) = an obligation owed by one party to another * It can be: * Money owed * Goods or services owed (to be delivered later) ⸻ * Key characteristic
Islamic Derivatives – What is Short Selling?
Islamic Derivatives – What is Short Selling? * Definition: * Short selling = selling an asset you do not own with the intention of buying it later at a lower price ⸻ * How it works (simple steps): 1. A trader sells a commodity/asset at the curr
Islamic Derivatives – Options Contracts
Islamic Derivatives – Options Contracts ⸻ Basic Concept of Options * An option contract gives the buyer: * Right (not obligation) to buy or sell an asset * At a fixed price * On or before a future date * Buyer must pay a premium: * Fee
Islamic Derivatives – Minority View, Warrants & Shari’ah Issues
Islamic Derivatives – Minority View, Warrants & Shari’ah Issues ⸻ A. Minority View on Options * Some scholars (minority opinion): * Support approval of options * Reason: * Useful for: * Risk management (hedging) * Protecting ag