The Islamic Financial Options are true financial instruments contracts, where one party sells the other specific assets at an agreed upon price, delivery of price and assets take place during an agreed upon timeframe, the financial instrument comes in two specific types, Call option and Put Option; each type has specially designed terms and conditions to function like financial options in the hands of the parties, while maintaining the compliance with the Islamic Sharea rules. Options are an essential risk management tool; conventional options are disallowed by the Islamic Sharea due to separating the ability to enforce selling or buying the underlying assets from the original sale contract, forming a derivative standalone contract which is traded as a financial instrument; the practice of separating specific rights from the original whole sale contract is noncompliant with the Islamic Sharea.
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