Is binary option trading halal?

Question

I want to know about binary option trading.

In this trading a person predicts that if the currency goes up in the next 1 minute to 1 day, then one will buy and if one's prediction is correct one gets a percentage of profit on one's investment and vice versa in selling.

The main thing is that there is a time for our prediction. For example, one might buy a currency in one rate predicting it goes up in the next 10 or 30 minutes, and if the market is above the purchased line within 10 to 30 minutes then one would win and get a profit.

Is this halal in Islam?

Answer 1

I’ve done extensive research into regular option and binary options trading being haram or halal.

The short answer after my research is: Binary Options Trading is HARAM.

Why? In Binary Options trading, there is no underlying asset which is traded or dealt upon. In each deal you’re simply betting that the stock price will be above or below a certain price after a given time period. If you’re right, you walk away with profits, however if you’re wrong, your “investment” has gone to zero. This is pure gambling with a mask on it.

Compare this to real business which is halal. In a halal investment, there is some form of service/trade done.

An easier way of thinking about this is as follows:

1) If someone invests $5 Trillion into Binary Options for Apple Stock, the actual Apple company is completely unaffected. Hence showing Binary Options have no underlying asset which is traded/dealt. Therefore this is haram gambling and not investing.

Now compare this to halal business:

2) What happens when you invest in a halal company’s stock? You’re betting the company will go up in value BUT in this case, there’s an actual underlying company, so this will classify as doing trade/business. Which means this is halal.

EVERY business consists betting/gambling because you’re betting that you’ll make money. Even with halal businesses, you invest/start a business betting you’ll make money. You have to look deeper to what’s under the surface to judge whether the ‘betting’ is halal or haram.

I’m simply human and prone to making mistakes, may Allah forgive all our sins as we may not even know we’re sinning. We can only put in the effort to stay on the straight path.

Answer 2

In options trading (or in Binary options), there is no actual trading of goods or stocks happening. What is happening is you put money and make a prediction on price movement and you get money if your prediction is true. In my opinion, this is nothing but gambling.

Answer 3

According to most of the Sunni shaiukh every Business which comes with the risk of profit and loss is Halal if it yields only profit then its haram.

Trading of any kind always comes with this kind of risk so its halal as long as you dont keep your profit in savings aka pls savings acc. Where your money just sits and earns you just profit aka Ribba

Furhtermore these sort of perdictions are made in every sort of Business now a days Wethere its trading or real-estate or buying commodities like gold etc. But we all know they rarely come true and anything can happen anytime turning your profit into loss as long as there is such a chance its halal.

Allah knows best.