Binary Options Trading in the Islamic Fiqh
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Channel: Hacene Chebbani
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AI Generated Summary ©
The speakers emphasize the need for people to handle risk and proper inspection and surveillance of each car and its condition, as well as the importance of making a profit and trading with a certain amount of money. They also discuss the possibility of investing in stocks and offer discounts to employees, as well as the importance of compliance with regulations and delivering immediate delivery of a deal.AI Generated Transcript ©
hamdu Lillahi Rabbil Alameen wa salatu salam ala Aisha from or seen seen them Hamid Vida Eddie he was savvy he may
she's gonna love him for coming for this halacha. And as promised before, we'll be talking tonight inshallah bow to binary option trading in the stock market or Islamic flip. We want to know the ruling of this kind of trading that appeared in the market in the last maybe six or seven years.
But before that, I would like to talk about the regular options that are traded in the market are called Classical options, or traditional options that they've been they've been for a while for a long period of time in the market. So we talk about them try to understand,
of course, the ruling in Sharia also, and if they are halal, why they are halal, or haram Why was the reason behind this ruling? Insha Allah with me later Anna, and most likely will talk about the concept of Allah, which is uncertainty in contracts. This is another problem beside Riba. Many people focus on riba interest and forget about some other forbidden elements in in Sharia. So, traditional option contract, when we talk about this contract, what is the definition, they said that an option contract is an agreement between two parties to facilitate a potential transaction.
So there is no
they are aiming for a potential transaction that might take place in the future.
On underlying assets, yeah, and if there is another asset could be stock, it could be an index, it could be
something else, a security, financial security that is sold in the market. So the contract is not about this asset is not about the stock
is about. It's a different agreement that is made to facilitate this future
transaction, this futures transaction might take place, and it might be canceled or killed, the option could be exercised or could be killed. But there is an initial transaction that takes place between two parties, between the seller of the options and the buyers in the market.
And here,
they said, this potential transaction
on an underlying security at a predetermined price, so they have to fix the price is called the strike price.
So he said, he will tell you, the seller will tell the buyer of the options, I'll be I'm willing to sell
100 shares for you I have this 100 shares at the price of $45. Your current price could be at that time $40. But he said I will sell it to you within this period of time at the strike price of $45. And then the buyer who buys this option, they will be watching for the price, the price will go down.
If it goes up if he's the buyer of a call option, it is in his favor will explain that inshallah we'll try to repeat that until it is clear.
The price goes down, then it is not in his favor. He doesn't exercise his right. So this agreement will give the buyer of the option option is obligated to sell or to buy a depends on the type of cotton we're talking about.
Deal dealing with and it has to be during a period of time, usually the classical period of the classical options is 90 days, three months.
Really we're not talking about binary options we're talking about the classical are the traditional options, even employees in companies, different companies are receiving options from the companies. We'll talk about the ruling tonight Inshallah, at least there is something here that We'll talk about tonight. Be the later So, the two types of contracts are put and call options if it is called option, then the buyer of the option has the right to buy but not the obligation is not obliged. The bribe price goes up. Then he will exercise his right and then he will buy at a good price price is up but he will buy it at the strike price which is as I mentioned now $45 So now Now let's explain
it. Let's give you a detail here Mithuna we have
Have a trader, Mr. A,
is holding shares of a company with a current price. The current price now is $40. For example,
he might sell a call option. So someone will buy it from him for this 100 shares for examples with a strike price as a set of $45. So taxi 495 is parked in the neighbor's parking
taxi. And the number is 495. Yeah, so we shouldn't Park in that area.
Now when when the holders of the shares, sells these options, he will receive a payment.
Let's say he shell sells this options for $2 each.
So if there are 100 shares, the total will be $200. Right. So who will receive you will put in his pocket $200. This is the payment these are called the premiums of the options. There is no they're not selling or buying any shares here, they're not talking about any shares.
Just doing this initial transaction, which is buying these options, call options. So the Mr. Gray here, as I said, he's a trader, and he selling these call options for $200. He received the premiums from Mr. B, who is trying to buy going to the market to speculate on the prices of these shares going up and down. So he buys this, these options. What will happen is they said Mr. A, who's sold the these options, call options is called the writer,
the writer of the options
and he is obliged to sell if the other one wants to exercise his right, then he doesn't have a choice since he sold this options. And he received this money this payment, then he is obliged to sell within this period of time, which is 90 days.
And he's called the writer of the options the other one is called the holder of the of the options.
And
as I said, as I told you, the underlying asset could be a stock could be an index could be anything.
Now the Mr. B who bought these options, he will wait for the prices for this within this period of time he has paid $200 as fees or premiums for these options. And he has the right now to buy within this period he shares for $45 Now he's watching the prices, the price go goes up to $50 to $50 This is an example right now, he has the right to buy these shares. Now for $45 they are being sold now in the market for 50. But he has the right since he made this agreement then he has the right to buy these shares for $45. So we will buy the shares for $45 for each share, he will make a gain of how much $5 So his total profit will be $500 because he now he has the right to buy this 100 shares for
50 for $45. The current price now in the market is 50. So he's buying a cheaper $5 his profit now is five because if he sells it again in the market right away, you will make $5 as a profit because he bought them for 45. So he made a profit of $5 for each year. Now the total the total profit that he made $500 How much he made now the net profit since he paid $200 And he made a profit of $500 his net profit will be
$300. This money that he made Mr be the one the holder of the options. His net profit is $300. This amount is the same amount is the loss of Mr. Eight.
This is very important to understand if you want to understand the horror.
We're talking about the concept of horror here.
This $300 is the loss of Mr. A and it is the net profit to Mr. B here.
What will happen if the price goes down?
So the strike price or the exercise price is $45. The Mr. B who bought this this options is watching for the prices and at the end of the period or beef
till the end of the pay the price goes down to $35. Do you think he will exercise his right to buy? He doesn't he doesn't buy them for $45 where the price in the market is 35. Right? So he does what? It kills the options. He doesn't exercise is right, he's not obliged to buy
the holder of the options is not obliged to buy, but if he wants to buy then the other person is obliged to sell to him. But here of course, he will not buy anything.
I mean, no one will buy this with this price when when they are being sold in the market, when the current price is $45. So now, what did he What does he do he kills the options. So how much he lost,
he lost $200 These $200 The loss of Mr. B is the same amount is the same mouth net profit of Mr. A
stray did not sell anything
did not sell, the only thing he sold is the options and he didn't sell his shares is what I mean. He shares with him he just sold the options for $200 the other guy did not like the price in the market, he did not say exercise is right. And this guy, the options are killed, everything is over. And this writer of the options made $200 And it is the loss of Mr B. Now, this is called this is called zero sum games, or zero sum measure 300 which was the profit of Mr. B was the loss of Mr A. So 300 minus 300. The total is 02 100 was the profit of Mr. A, and it was the loss of Mr. B 200 minus 200 is zero. So they are called more or less free blue Larrabee and more ideal as a free will
what will fuqaha with the language of the Folk AHA Haroon Elmo Amana tutor do Romanian whom we will warm either Dorothy Moran mela to banal Hoon me well war me for here Maha Ramadan history and history and for here Maha Ramadan Fisher This is Chi This is a rule
I need to explain it more
Mr. A and Mr. B both of them, they don't know the outcome of the transaction.
They don't know what will happen to the prices, the prices are going up or down. If they know the direction of the market, do you think he will do this transaction they will not do it.
Because they know at least one of them will be a loser, right. And one of them will be a winner. Of course the winner would love to do it. But if the loser of the other party knows that the direction of the market will not be in his favor, then he will not do this transaction, he will not buy these options. Because he doesn't know the outcome or the direction of the market or direction of the prices. He is guessing.
He's guessing he said he's predicting, trying to maybe study the graphs and look at listen to the news and see what's going on. And try to guess predict the direction of the prices and making this transaction hoping that you know the direction of the market will be in his favor. And he will make money. And the other one is hoping that the prices will go down. And then he will keep the payment of the options, right. So everyone is you know, waiting for the direction of the market or what will happen in the market. So here, both of them we don't know the outcome of this transaction.
When you don't know the outcome of a transaction. This is not our Fash
her Fash and we try to switch off the cell phones.
So this is not as far as it's called excessive horror.
A little fishy area who will Johanna uncertainty.
And of course it's a type of risk. There are some types of risks that are accepted in Sharia. When you do business, commercial risk or natural disasters, someone is bringing some merchandise I said from China or from another country and something happens on the way
a natural disaster was strong wind and no something happened and he lost all his merchandise or his wealth. This is hard to rely on it you can do nothing about it.
commercial risks is when you bring some merchandise to the market hoping that you will be the only one selling this thing. And then we'll find out that there are many people who are selling the same thing and the prices will go down and you lose some money. But this is something that you cannot
To control to Hara that is haram in Sharia as it is forbidden, when you control the terms of the contract but all purpose you gamble with your money,
you accept terms that are not clear. You accepted Johanna you accept the deal with uncertainty in your contract. So it is a contractual risk that you the both both parties have have accepted to, you know, to include in their contract. This is what is not accepted in Syria. This is the thought out of the Obama.
It he said water is divided into three levels, there are three levels of water, there is excessive water, which is a horrible fashio. When there is complete uncertainty about the transaction here, you don't know what will happen to the market. We don't know what what will happen to the price of gold, for example, it could be the underlying asset could be gold, or could be a stock of a company, you don't know if the price will go up and down, you have no clue. Even if you try to study the market and listen to the news, and you're just predicting. I mean, it's very difficult for most people, especially, you know,
individuals and regular traders, I'm not talking about institutions, institutions have more access to the market, they have more access to information. And it's very difficult for individuals actually to win against institutions. But I'm talking about individuals, most of us and we don't know we don't have good access to the markets, it's very difficult to understand and predict the direction of the market. But even if you are doing it, there is no guarantee that the direction of the market will be in your in your favor. So it is eimeria ai by Minwoo eurocon. What is the proof Hadith in Sahih, Muslim Nahan the visa sell them and bait. The truffle lines I sell them has
forbidden the sales of water. This is how they say the word Hunter is not mentioned in the Quran. It's not like Reba. Reba is mentioned in the Quran and mentioned in the Hadith. But the word of God which is uncertainty is mentioned in the hadith of Rasulullah. Selim is a Muslim Now Hanabusa Salam, and bei Ilana
will who look and feel academia and there are some other examples that are traditional examples that were mentioned in the old days during the early days of Islam, selling a bird in the sky and he telling the person look at these birds, I'm going to catch it and sell it to or selling a fish in the in the in the in the sea or selling something that you don't know. I mean, you don't know if it will be good, you will be happy with it or not. They had some sales, some sales that are based on volume, uncertainty, complete uncertainty, and ignorance. They will practice during jehadi The pre Islamic era, what Asuma cisilion came, he said all these sales are not valid, they are not accepted
in the Sharia of Allah subhanaw taala so three levels of water, excessive water, which is very fast like buying a car, selling Brother machine and even if you trust Him, even if he's your best friend, giving him $3,000 or 400 I need a car for this month. Just buy me a car without telling him you need the, the
the year of the car or or the mileage or just I need a Honda and that's it. And then we'll bring a car you'll be you'll not be happy with it with it and then you'll end up having a bad relationship because you want it to clear this is another this is Johanna right. So you cannot do that you cannot use our own want to buy a car from you, your 3000 4000 Just give me a car and everything will be fine inshallah. So you can't do that in Islam, you have to look at your subject of sale, you have to examine it you have to be happy satisfied. Now let's talk about method and the philosophy level. We say if we can call it philosophy of Islam regarding sales,
in sales, Islam wants both parties to be happy. So it should be a win win situation. The other situation that talk we talked about it's a win lose situation. It's all all the time it's a win lose. One is winning with a winner the other one is a loser with the other one makes a profit the other one with the same amount will be the loss for the other person. But regular sales that Allah subhanaw taala has made Khaled everyone is a winner. We're talking about the ideal
sale here. Of course there could be some other problems, cheating or some other problems that are there. But let's talk about uncertainty removing the element of uncertainty.
Now method and Amedy selling his car and Mohammed is buying his this car from Iman for $5,000.
Ahmed here is willing to abandon or give
Have up his car because he sees more value in the $5,000, he doesn't need now this car, he needs money. So he sees more value in this amount of money or $5,000. So he's willing to give up his car for this amount of money from that perspective, he's a winner. In his site, he's making a good deal, selling this car and getting $5,000 Mohamed who is buying this car, he looked at the car, took it to the mechanic, looked at the mileage looked at the tires, listen to the sound of the engine. He tried the car,
drove it for half an hour Rola in the city. He knows about you know what he's doing, he's happy, he's satisfied, he sees more value in the car. That's why he's willing to give up his $5,000. From that perspective, he's a winner. So at the end, it is a win win situation. This is what Islam wants us to do. And all the information is clear about you know, the the sale or the contract, and everyone is happy. And everyone is worried is a winner at the end, you go to the market to buy something, because you need it and you're happy and you're willing to pay that $20 $30 Because you see more value in that product that you're buying. So from that perspective, you are a winner. The
other person is making business he's selling things making more money, he's happy everyone is happy. But when this when it comes to the sale here, one of one of them will be will be upset, there is no doubt about it. It's a win lose situation, it is some zero sum game or a zero sum measure.
Now and as I said that Ybarra that is used between the by the fuqaha they said either Adara till more IRA to history and banal Hurunui will be in the lagoon me world warming, failure Maha Rama what is in whom is a prophet and whom is complete loss. So, when the transaction has only two options, it's either profit or complete loss of the capital, then it is haram. It is not accepted in the Sharia of Allah subhanho wa taala. Now we're talking about the different levels of water. The second level of water is medium you can call it medium level of water, when the information about the contract is not full, fully provided.
And here, it could be controversial, I don't have examples in mind now, but it could be you know, studied case by case the scholars are supposed to look into it, when they deal with a case that has a medium level of water, when the full information is not provided about the contract or about the product, there is some information that is provided, but the whole information is not there. So it could be a medium level of water. You know, it could be accepted sometimes when there is a pressing need, because there is some tolerance in Sharia for her. But when you compare her with riba there is zero tolerance for Riba in Sharia. Riba is only Halal at times of necessity. When someone is about
to die if he doesn't deal with riba or he will lose
a part of his body or he will only stay with his family in the street or he will lose completely his wealth you know, there are different types of necessities. So at times if necessity Riba is permissible verdura to be humara like someone traveling in the desert, doesn't have food, the only option he has is to eat some pork. Right here he is allowed to eat this is a necessity the ruler he needs to survive. So but however there is some tolerance for vermin Sharia it is called which is the third level of water it's called the letter C. A minor water a minor Hara like buying methanol and chocolate egg.
Your your child may be interested in the in the toy inside right? And you buy it for $1 But you don't know what kind of toys inside right? But this is something very minor. And there is something that he will benefit from chocolate even if he doesn't like the toy.
He will eat the chocolate or Maharana bar chocolate bar that has some toy with it or or something someone go buying a house. Of course he needs to look at the house and any you know, ask for the date. His house was built and and get all the documents and do the due diligence talk to his real estate agent. But he cannot dig around the house to check the foundation.
He can't have you seen anyone you know buying a house and digging around the house to check the foundation. He can't do
that is not I mean, this, this is a horror that is accepted in Sharia, you don't know that what kind of foundation is there, buying a used car, new car is everything is fine, it's a new, but buying a used car are you supposed to take out the engine for examination, you can't do that. You just try the car, you listen to the sound of the engine, you take into a mechanic, you try your best, no the mileage you look at the tires and you try your best, you're happy with the car hamdulillah it's fine, you buy it. But there is a minor level of horror there, you don't, you're not able to take out the engine. And you know, look at each
every piece in the engine, you can do that. So this is a level of water that is accepted or somewhat a farmer
buying method in the field complete field of carrots are out inside in the ground, or potatoes, you cannot go and see if check every every carrot before before we buys the whole thing, he can't do that. And he can check five pieces or six pieces from different corners. And then if he's happy, he will look at the quality of this, you know, vegetables, if he's happy with them, in general, he will get an idea about you know the rest of the carrots in this in this field. And then he should be able to make a deal. This is accepted in Sharia, he got an idea, right about this, this kind of vegetables, but he cannot go and check every piece because they are supposed to stay in the ground.
They are supposed to stay until you take them until the time comes for you to sell them in the market, then you take them out and you sell them in the market before that you can do you can do that. So this is a level of horror that is accepted into every other day you take you take your kids to Chucky Cheese center, what is the purpose of taking your kids to the Chucky Cheese center
for them to play and have fun. So you're paying this money. What is the counter value, the counter value or the subject of sale is for them to spend time there, enjoy their time and play with these machines. These tubes and this bouncing you know castles and everything. So you want your you're paying this money for the sake of your children playing. Now your children will collect some tickets, coupons. And then at the end he will take you will take these coupons and get some gifts. You don't know what kind of gifts or you don't know how much how many coupons your kids will collect. But is this the subject of sale? This is not the subject of sale? This is an accessory.
Very cool. Do we have a rule in Sharia, you use whatever and man I use this decline and you need the subject of sale here of contract is for them spending time in that place and play with those machines. So this is something extra, which is them collecting some coupons and going to the desk and getting some gifts of some candy. So what if you don't know what kind of candy they're gonna get? Or what kind of toys This is not important. This is accepted in Sharia. This is a minor horror that is accepted in Sharia law Allahu Taala Allah. So you see the difference between I know the different levels of horror.
Now.
Okay. And options are clearly what
the options that we talked about, right. So let's move now to what is called El Paso's or employer, employee stock options. So here, these, these stock options are granted to employees
of a company, let's say there is a manager who is coming is hired. And the company will give him a salary. Say We'll tell him we'll pay you 100,000 With the whole year, but we'll give you the right the right now. They're giving him the right to buy, for example, 500 shares of the company after two years, not now, after two years at a strike price of $50 per share.
So what is the purpose of giving this options to this employee to keep him in the in the company?
Keep employees in the company and also to motivate them is an incentive. Okay, but the employee is not paying anything.
So he's not gambling with his money. He's not spending anything. It is a gift from the company. It's a bonus. Or it's a gift or a grant from the company. So he's not paying anything. So after two years, for example, he told him as a we're going to sell these 500 shares to you at a strike price or exercise price of $50 per share. But after two years, the price goes up to two
$70 per share.
So the employee is very happy now, he will sell he will buy the shares from the company at a price of
$50, he doesn't buy with the current price with the market price, which is 70. So he's making a gain of $20 for every share, that would be the total of $10,000 right 500 shares versus 20 is 10 $10,000.
So now he will exercise after two years, he will exercise his right, he will buy these 500 shares, sell them right away in the market, and make a gain or a profit of 10,000. From this transaction. This arrangement was made halal by methanol, for example, Sheikh salah, so in some other scholars, they said it is halal, because here, it's not. The employee is not spending any money. He's not gambling with his money. It is a grant that was given to him by the company. The only thing is employees, Muslim employees have to pay attention. Most of the companies here deal with interest, they have no interest income. So he should pay attention to the purification of his income he needs
to he needs to purify his income. What you told me he's an employee, he's receiving a salary, there is a difference between receiving a salary, giving a service to the company or receiving a solid for it. Your service is supposed to be Khaled since you are Muslim. So your work should be halal, you're working even the company some other some other activities, you're supposed to do Halal work for this company. So you are receiving a salary, the salary is halal for you. Right. Now, the moment you buy shares, you become one of the owners and you have more responsibility in front of Allah subhanaw taala.
The moment you bet you buy the shares of this company, you have more you have more responsibility, you are not just a contractor with them, giving them some services and receiving a salary for this work that you do know you become one of the owners, you are one of the shareholders, he should have a say in the management of the company. So that's why the rule ama they said here, it's better if you know, you know that the main activity of the company is halal, let's say oil and gas. But you know that this company is keeping money in the in the bank. So it's easy, how do you solve you can go to your, your company or your accountant. And if he is,
if this company is a public company, and he listed in the listed publicly listed, then all their financial statements are made public. And it's easy for your accountant to look at the balance sheet him he might need to look at the interest income and it's easy to find out the percentage of this interest income and maybe he needs to look at non operating activities, what are the non operating activities in an income statement, they are any other activities that are not part of the main piece of the company. You could be working in an oil company or happy it's only oil and gas everything is clear and halal and pure, but your company could be investing in other activities and other areas
that are not halal, that are not healthy. So, your accountant needs to look at interest income and he can do it in one hour by looking at the financial the balance sheet and the different financial statement and also looking at the non the percentage of the non operating activities.
And it's easy for accountants do it and he will tell you the percentage of this this wealth here coming from these activities if they are
or flow from interest. So, if it is 5% Making 10% Give 10% out of this money as a donation out of this profit that you made
right we said you made 10,000 as the profit right if 10% as a donation or if he tells you if it is 10% Make it 15% or 20% to be in the safe side and then your income will be purified insha Allah the least
he should be halal Bismillah he added our coffee alright in Arabic theoretical as shown here are two more the feed is our employee stock options. There is another way to receive this reward, there is another way and here I want you to pay attention as a Muslim employee if you are working with a company, if they are giving you this option, you can talk to the financial department in your company and see if you they can include in the agreement, one clause there they you can you have the right to receive this difference. You know the difference between 50 and 70
That was $20 you are you have the right to buy the shares for $50. Now in the current in the market, sorry, there are $70. So the difference is the gain is $20 per share. So the total of your profit is 10,000 Some companies, I think they're willing to give you this 10,000 cash,
and you don't have to buy this 500 shares, they don't have to sell to you this 500 shares. And they give you this 10,000 cash as a reward. Because you worked hard for these two years you stayed with them, and you help them you know, make the price go higher, to $70 per share. So you contributed in the success, we some companies will be willing to give you this money, cash. So you don't have to buy this the shares, you're not an owner, you don't have to purify your income, just get 10,000 And that's it cash, put it in your pocket, and we'll be happy and this is halal inshallah long time. Now let's talk about binary, which is in you.
I'll show you the picture was supposed to
show this
trading platform, this is something new that was introduced 2008. I don't know if you are able to see but I'll try to explain this. This is binary option trading platform. They're selling the they're looking at the prices of gold here, gold. So with this binary options, the traders, there is no underlying asset to be sold or bought in the future. So there are people who come and trade in this market, the binary, they're dealing with brokers, most of them are not regulated, like marijuana, to the best of my knowledge, this activity is not regulated in Canada is not regulated in the US. But it is regulated in many European countries.
Okay, so these binary options, for example, here we have they are they are looking at the price, they are monitoring the price of gold. So they tell you, and the duration, duration of these options is not 90 days, like the classical or traditional options, it could be 15 seconds, it could be one minute, could be one hour, it could be 30 minutes. So you have to the only thing you do, you have to predict the price.
Or guess I would say guess the price. Because even if you have graphics in front of you is try to look at the history of this stock, or this asset.
I mean, it's very difficult to get to try it is very difficult. So you can see, sometimes there is a trend, you look at the graphic graphic and there is a trend, the price is going down, but it might go up a little bit and then down again and then up a little bit. It's very difficult. So by the way, but detail you must earn the minimum deposit for some companies is $100. Could be 202 $50. With many brokers. So you can you can trade with $100, let's say $100, we tell you look at this 80% Here 80%.
If you click on call, that means you are predicting the price to go up at the end of the duration. Let's say the duration is one minute 60 seconds.
So you put up a press call which is going up. So at the end of 60 seconds, if the price go goes up, how much is the payout is 80%.
So they make them attractive by giving you like for $100 They give you $80 so that your payment will be 180
We make them very attractive, but if the price goes down, you will lose your money. Completely
$100 So it's a zero sum game.
And this is pure gambling. Because there is no economy here. They're not taking your money to the market. You're the other counter the counterparty in this transaction, they are the brokers. They don't take your money to the market. They're they're just doing this. You know this business with you and they have more access to information than you and they do it they do it in a way they will be always winner. Because if you if the market is not in your favor, the price direction of the price is not in your favor. You lose your whole money. Nothing you get nothing $100 But if you when you don't get one another $100 you get only at 70%
So here's my head, this is gold. And the duration of the this transaction is one hour. They have here here 30 minutes, they have one hour, they have two hours. So he clicked on one hour.
And the time remaining here one minute and 40 seconds, one minute and 40 seconds. So the guy is waiting is waiting is waiting. Because his is His blood is boiling.
And if he he's investing only this is it could be an example. It could be true. I'm not sure but what I know most of the these companies, the minimum deposit with them is 200 250. Some of them 100. But he has they put $25. So he put $25 How much you earn. If it is in your favor, you're $45
So you make like
you for, you know trading with $25 you make $20 profit,
because it's 80%. This is a pure gambling. This is pure gambling. It is another form of horror fair hush excessive horror, because you don't know it's just guessing it's a guessing game. You don't know that the price will go up and down. I mean, it's so there is no there is no way to make it halal. Unfortunately, there are many companies
who are offering Islamic, Islamic binary. I count tradings.
And they're playing with this with Muslim traders and investors. They have no certification. If you look at their website,
how can you challenge them? They always have someone ready there to chat. You can click on and chat with him or with her to hotel me, who are you surely our board members?
What can you certification you have I looked at some of the companies some of the these accounts, they had a sign there that it is certified
Islamic or Sharia account.
And when you read the explanation, the main thing we focus on is river that there is no river here.
We know that there is no river here, the problem is not about River, the problem is about her excessive water. So no one is talking about betting the element of betting here, this is clear. This is a clear gambling here. There is no you're not adding any value to the to the economy, you're not bringing any merchandise or any commodities to the market, you're not adding any value to the market. So this is pure gambling. But yet these companies and many of them, they have their offices in places where financial markets are not regulated.
And not regulated like Cyprus and some other countries. Cyprus, I mean, was trying their best in Cyprus to regulate the financial market. But as I told you, to the best of my knowledge, these activities are not regulated in Canada, they are not regulated in the United States of America. As a matter of fact, there are some authors,
someone who wrote a book about binary options, profit. His first name is John forgot his last name. And he himself saying there that among the challenges, the challenge is that this
investment equality investment, but it is not investment is gambling is facing is that this activity is classified in many countries. And he's talking here about European countries, and North American countries and everything as gambling. So even non Muslims or financial authorities in these countries are classifying this activity as a pure gambling. He said what the challenges that these activities is facing. And I know someone who lost the Muslim Brotherhood lost 200,000 200,000
With this activity, and he called me on the phone, I don't know who it is, but he called me on the phone said Brother What do you think about this I lost 200,000 with a company from the UK.
Not from here, and he met someone online and he convinced him to trade with with a broker there
in UK and he lost 200,000 This is a big amount of money. So I hope that everything is clear about these kinds of activities. If you have some questions we can we can talk about them in sha Allah still have time before maharrey beginning later Allah I'm sorry, you couldn't
use the screen but that's fine. I think it's easy right?
The concept is not difficult. If you have questions, feel free, raise your hand and do we shall we will talk about them further.
Yes, that's why I started with the classical options, there is an underlying asset there. That means if you choose to buy the stock, you can buy the stock you can buy the indexes, buying index trading indexes is haram. But let's say stock some stock has fallen. So the asset is there. But the option itself, the sale of options itself is haram. Because you are also gambling, you don't
know the binary options, there is no asset there any there is no potential transaction in the future. The aim is not the aim is not to buy gold or stock in the future through this just betting on the prices the direction of the prices, there is no asset but it's not haram because of that only. This is one element there on Monday mentioned any you're not selling anything, not selling a tangible asset you're not selling a right financial right you're not it's just you're you're just gambling on the direction of the prices. But even if there is an asset like the classical or the treasure, that traditional options, there are still Haram is options unless with you know there will
be became halal. When you did not spend your money as an employee they will given to you this right was given to you for free from the company here the became Khaled because you are not gambling with money. If you put your money, if you bought it by them, then you will be gambling with your money. You don't know what will happen to the price. It will go up or down. So is the same thing. So my point is even if there is an underlying asset, like with traditional exam, it's still the concept itself is the concept itself has got an excessive water and therefore it is haram is not about the river is about another Farish excessive uncertainty, yes.
Have now tested the savings account by
pressing
the
menu of authentic savings accounts. And then
from your savings account, and everything saving like every
other time, but where do you make money?
So the saving accounts now that you live in the checking 30 to 100,000? Yeah.
Yeah,
well, I, the brother is talking about tax free savings accounts, I have mixed feelings about these tax free because they are saving accounts, it will generate automatically interest. And you said comparing them with checking account, you don't generate interest. So you are in the safe side, I mean, your art to a certain degree, because the bank is using your money anyway. Yeah. And so your money is used in different years, right. Riba based transactions, they're giving your money to incorporations to investors, and they're only making interest income through your own money. They're using banks and financial institutions. They're using the money of the public to you know, run their
operations. So your money is used is mixed with this with these activities.
Because what the bank the main activity of the bank is financial intermediary intermediation, taking money from depositors and giving money to businesses and corporations. And so it's a financial intermediation. But this is something that we can do nothing about it. But when it comes to tax free savings accounts, I have a mixed feeling about them. Why? Because they help you saving on your taxes.
This is something good. And we're supposed to reduce our taxes as much as we can. From the other side, they generate some interest and you said yes, you can take this interest and give it as a donation. You don't have to consume it. So it's up to you I don't have a fatwa about them.
You know, to me, it's not clear to me. So from one side you are going into an account that will generate interest you are not supposed to do that. But at the same time there is something good about it which is your your money, you don't pay taxes on this money.
Which is another something good something. So Allahu Allah. I don't have an answer about that. Yes, brother.
In this
video
when we're
working together
we had a lecture about this topic
one year ago when it's about screening of share, sharing a screening of stocks in the market. Now what we know here in the West that all companies deal with interest. So, the scholars are divided into two groups regarding investing Muslims, investing in the stock market in this environment. So there is a group of scholars who said, and Muslim is not supposed to invest his money in companies that deal with interest. And this flatware is good for people who live in the Gulf area or Malaysia. They have different Halal alternatives. We have companies that are pure,
this what they're saying there and they don't deal with interest. So the purified their income and wallah Jota an alum, but they said they have alternative Halal alternatives in those countries. Here in the West, we don't have this alternative. So we have two opinions, a group of scholars who said no, if a company is dealing with interests, you are not supposed to pay there to buy their shares and trade them in the market. The other opinion they came up with the other group of scholars they came with came up with a criteria to select chairs with different companies. So they look at their financial statements. They study all the structure of these companies and the tolerate some
small amount of Riba, a percentage of haram activities or interest income. These are called Bill Arabiya will look on Araby al ash Shadowcat that we'll assume will follow up. Or companies with shares have mixed income. And they cover income coming from Halal sources, an income coming from haram. So they have their criteria. And they have their Islamic indexes. Sharia indexes in Canada here we have s&p 60 Sharia index. So this is the only option we have. I'm not saying it's halal, because it's a very thorny subject. And many scholars, many qualified scholars, I have studied their their looked into their writings about these kind of companies, many of them would talk about to his
two opinions. And at the end, they don't give their opinion. They tell you about two opinions, and they stop, because they don't want to take a risk here. This is Sharia issue. Right? It's very difficult, because you're dealing with the income that will come to people, people will use it, they will support their families with it and everything. So if you feel comfortable with it with this, Sherry our index criteria can look for these options and and you know, trade through them. If you're not comfortable and you save or stay away from River, then it will be your option, your choice. And I think it's a better choice of Allah, Allah Allah, unless you look at it from a different angle,
there is an angle that your money is already in the bank.
Yeah, and the bank is using it to finance these kinds of activities, maybe you should put your money in these kind of controlled and monitored activities and they are controlled and monitored by scholars. And these scholars every three months, they look into this indexes. And if this company is not compliant with their with your criteria, then it will be taken out and leave only these companies that are compliant with this criteria. So they're monitored walau to Allah. But of course in the Arab world in the Muslim world, there is this option is not there because they have some Halal alternatives. Allahu Allah, Allah Allah know
anything that is not clear about options or binary option tradings.
Forex,
Forex, yeah we did a lecture about it two years ago, so available online. It's haram Iannuzzi you cannot make it hello like this one here. You cannot make it Helen, it's gambling. Forex you cannot make it halal. The way it is done in the in the international markets, because the delivery tacos in Sharia app the surf the surf currency
exchange contract is very,
it has many restrictions in Sharia. And when you exchange money, the delivery has to be on the spot, you have to receive either real possession, you receive it in your hand, or constructive possession, you receive it in your account, when you receive it in your account, you'd have immediate access to your account. So here with Forex, you don't if you make a profit, you will receive it after two days, 48 hours, and also last SLM, emphasized the concept of you know, immediate delivery, when we exchange money, gold with silver or gold with gold with silver with silver dinar with them. All these ahaadeeth are well documented, they are authentic hadith. And the other problem with this
activity is that you have to trade through a broker.
So the broker will tell you who might tell you that I have an Islamic account, these Forex, companies, they have Islamic accounts too. So the only thing they look at, if you will leave your account your position open overnight. If you don't have an X Slavic account, if it is a money that you borrowed from the broker, they will charge you interest. So if you choose Islamic account, they don't charge you interest because they believe that the main problem with Islamic sharia is the concept of interest. But there is another form of riba that these companies they don't know about that when you get a loan from someone, if he stipulate another condition in the contract, so that
will give you a loan. But you have to trade through my platform, you have to do all your activities through my company.
So he will benefit from this loan, we're co located in general and wherever any, any loan that generates any benefit through a stipulation,
then it is a form of rebar through a stipulation. That means to make it a condition short. If I gave you 100 tau 1000 as a loan, and after one month, you decide to give me 1100 instead of 1000. I didn't ask for it. But you said this is a gift from me. Is it halal or not? It's Halal because it was not stipulated it's an increase rice need to pay attention to that. It's an increase I gave him 1000 as a lord, he's returning 1100 This 100 is halal for me why? Because I didn't ask for it. I didn't tell him pay me 100 extra. So it was not a conditional
contract. It's not just gave me a loan for the sake gave you a loan for the sake of Allah. But these people know, if you tell them I'll take a loan from you. This is the margin margin trading. In Forex, in forex, you cannot trade with $100. It's not like binary options trading, you can trade with $100 $200. In Forex, no, the movement of the price is very small, very small.
So you need to make like $500 profit with 200 profits, you need to at least trade with 100,000 or 200,000. So from where you got the you get this money,
it's not your money. Usually it's you make a deposit of $1,000. So the broker will tell you for for this 1000 For each one for each dollar, I'll give you $100 to trade with, but he doesn't give it to you in your head. He will tell you it is in your account. It could be just numbers here any money is not there, just numbers. So we'll give you this 100,000 block to trade with.
So he's giving you a facility. It was classified as a loan by by Muslim scholars. But you cannot tell him I will take this 100,000 and trade with another company. No one will allow you to do that. He's giving you this facility because he wants you to trade the trade through his platform. So he's benefiting from this loan are co located in Georgia and a fan for Horiba for Hoonah. He's stipulating he's making it a condition that you trade through for the day you can maybe sell them had Hadith mature now Hanabusa sell them and buy in yourself. Because Allah Selim has forbidden Muslims to combine between a sale and a moon in the same contract. A sale what what is he selling
here to you? He is selling his services. He's not asking for money. He doesn't take commission, some of them they take commission, but some of them will benefit from the spread. When you are trading there is a amount of money that they take from every transaction. So he will benefit from from this transaction that you do. So he will it's a contract.
that you're making with him. But at the same time he's giving you a loan. So combination of a sale and a loan or another contract and a loan
in order to me and as soon as I sell him said this is a form of Riba.
You understand what I what I'm saying here? Can I tell you that Aaron Mohamed,
you want to loan you need money, right? I'll give you $1,000 But with one condition
you buy my car? Oh, you rent we rent my apartment. Can I do that?
I can't this is a form of Riba.
I'm telling you, I'm not going to increase the loan, but I want to benefit in a different way I want you to buy my car, I want you to rent my apartment. I want you to work two hours three hours in my in my place.
So I am generating some benefit with my loan either no immediate riba even if there is no financial here increase above the capital that I gave it to you, but it is still a form of river. So this brokers the combined between the sale and this loan and also the delivery the delivery is always 48 hours in the in the international markets and this will make it hard
so there is no Islamic Forex account or Islamic binary option trading account even though they are available online and they are cheating many Muslims and why Muslims are trading through this this companies yes
how much funds it depends yeah and it's they are they are institutions do you know the collect money from from investors and then the the investors money in the market? It depends how they do it. I'm not sure really I'm not I'm not familiar with their activities. It cannot give you an answer about
Yeah,
I know. Yeah. Futures are not not halal futures options. These are derivatives most of most of the derivative derivatives are not Sharia compliant
can we invest in stocks at companies we work
with we offer discounted rates to employees, I said if it is a gift from the company, it's Halla take it and sell these shares in the market and
try to purify your income your profit
is what they said what I explained during the lecture.
If the company gives you the stock if they give you the offer of the stock for free then take it and share it sell it in the market and try to purify this profit give 10% Will as a donation will you can talk to your accountant he should be able to tell you the percentage by just looking if it is a listed company all their financial statements are public and then he should be able to get access to this financial statement should be able to tell you the percentage of interest in come along to Hana
Yeah, yeah you will be you'll be you'll be taking some risk here because we said all these companies deal with interest and when you buy it on purpose
it's like you're going into this transaction on purpose you don't receive it You didn't receive it as a gift was a bonus from a company.
So I don't advise you to do it if you know that your company is involved with interest because I mean all of them are.
As I said before, the only option we have if you want to trade trade the companies that are included in this theory are indexes that could be the safest thing you do and they are not in the sky agree about their Sharia compliance as I said they are divided about that group of scholars decided
to buy or trade these stocks and some of them decided
Allah Hello Tala you can listen to this lecture online is available
now
I didn't get it
Do
you want
to buy six pieces
and look at the market
did you realize
I've got everything I need
I get some for free so you have to buy you have to bind them to give you some of them for free yeah Allah Allah I don't have an answer for that
any
we don't want to use our personal interpretations but the earlier muddy said if you are not if you don't feel comfortable about the income or activities of the company they're not supposed to share the buy their shares because the moment you buy their shares you become you become an owner that's why they're saying about this gifted or this grant you receive it
you sell it right away in the market.
You don't keep it sell it in the market make your profit and purify it and that's it.
Is company pension not CPP I pay share every company matches the invest in the market.
Yeah, that's another issue you're talking about our RSP right RSP is here
so Nam
not CPP not CPP not Canada Pension.
Okay, it's a different arrangement, different scheme
is not RSP
okay.
Okay, they will give you money
if it is up to you, if it is up to you, if they take only 60 and they give you $40 40% Money, right? Can you just keep it in your account and you don't invest it?
It's a portfolio and they give it to the bank and
yeah, yeah, I know what you mean. I know what you mean.
Yeah. So one one is called here in North America which I respect I respect his knowledge and his element his Taqwa. He said you can take benefit from this arrangement. But if you know that they are investing this money in different companies, finance financial companies and could be some entertainment companies and different companies you're not happy with or you don't know them, you don't know they're the nature of the activities. You can take this money you take only the capital, if there is a profit
profit is account your account makes a profit don't take the profit give it as a donation don't benefit from the profit take your money which is 60% and the 40% that you took it as a grant received it as a grant from the company which is the capital and any profits you make through this kind of schemes said you can give it as a donation.
Jonnie if you if you can invest through Sharia indexes it would be the safest option Allah so you can do it this way.
Or you can keep it in a savings account and give the money the interest that usually that is generated you give it as a donation. Okay, I think we need the last question here before we we make the event at what time is the other
920 is the column
905
are today's Friday. So 920 is the call.
So 905 It will be Sunday shall that okay, do you have any question the last question before we make the caller or the other? Yes
we offer what
rent you're renting from them and they give you one month free challenge. Take it
Oh, Aki. This is very dangerous here.
have to pay attention it was talking about loans combining between a loan and a sales transaction or another transaction loan.
Here you are renting from them.
And they are giving you one month for free, there is no loan that is involved here.
Got it now, you know talking about the immediate delivery position.
I had some people send me sending me questions listening. There are many people who listen to this lectures outside Canada from other cities and everything. Some of the people understood when we talked about forex than any transaction we do, then we have to deliver the both counter values in the spot, whether we're selling cars, food, rice, anything,
I was talking about money.
Any currency exchange,
when you deal with money, gold and silver or money, you have to immediately deliver the counter both counter values, this is after the serve. There are many contracts in theory, there is the seller market, the surface, this will be a general sale. There are different types of contracts, and every contract has its own condition. Here I'm talking about sort of dealing with money selling and buying money.
So we have to pay attention here it was talking about combining between a loan and another transaction. Because by giving the loan and asking him to do a transaction with me, I am benefiting because I make I made it a condition for this loan. I'm not going to give you the loan unless you buy my car. I'm not giving you this loan unless you work for me in my business for two hours or three hours. So I'm generating some benefit for
an account of this loan. Here. The transaction you're talking about has there is no loan involved. You're renting from them, which is halal. And they are giving you one month for free talent. There is no problem. handler there is something Halal tonight
okay, just come along