Future in option trading
Our religion permits trade buying and selling but forbids ways of illicit profit. Thus, the trade is ensured to be done based on sound and fair criteria and the spiritual responsibility of a person is removed.
That is, if a person obeys the orders of the religion in all of his life, he will be at ease both in the world future in option trading in the hereafter. Trade is licit and permissible as long as it is carried out within the bounds of legitimacy whether it is in advance or on credit. There is also religious encouragement regarding the issue. What is essential in buying and selling is trading and making profit; but this transaction is also a kind of service to humanity because it serves people.
Besides, all kinds of activities are regarded as worshipping as long as they remain within the bounds of legitimacy.
Therefore, they have spiritual rewards too. In Islamic law, there is no profit limit in general; the profit limit is determined by the market and the conscience of the dealers, which gives great responsibility to dealers. Telling lies, selling things at exorbitant prices through tricks and cheating are not justified in any kind of trade.
During buying and selling, one the one hand, the rights of the dealer are taken into account and some binding criteria are introduced so that the dealer can continue his trade life.
On the other hand, the state of the customer is taken into account and it is not approved when he is cheated future in option trading to his ignorance about the characteristics of the thing he buys.
The dealer is shown the way to have a determined different price for credit sale compared to cash so that he will preserve future in option trading capital and continue his trade life safely. In the Quran, the following is stated: However, our Prophet says in a hadith that two sales future in option trading one sale is not permissible.
The scholars who explained that hadith had different interpretations. Some scholars explained that a different price for the deferred payment sale compared to cash sale future in option trading not future in option trading permissible; others stated that the difference in the price was not interest therefore it was not forbidden by that hadith. Imam Tirmizi states the following opinion while explaining the hadith: It is not future in option trading. However, when the contracts are made differently and the two contracts are not connected with such a condition, there is no drawback to it.
What is forbidden according to the hadith is the other type of contract, in which the price of the product is not certain. There future in option trading no agreement on one of the alternatives.
However, if both future in option trading agree on one of the alternatives, then the contract becomes permissible. It future in option trading have no connection with interest. It future in option trading because no parties agreed on one of the prices. What is important here is the agreement on one of the prices and making the contract accordingly.
There is no religious drawback. What needs to be paid attention here is that a definite contract has to be made agreeing on one of the cash or deferred payment prices. However, it must be known that the sales that contain terms as follows are not permissible: The interest mentioned in hadiths becomes obvious in that kind of sales. Some official enterprises add late charge when they sell things on deferred payment. This payment is called late payment interest officially but actually it is not regarded as interest.
That is, the customer future in option trading free to choose it. If he buys it in cash, they do not charge any extra money but if he buys it on credit, they charge some extra money. That extra money is regarded as late charge late interest and it is permissible. However, it is necessary to state that the judgments that fiqh scholars give about the permissibility of late payment interest do not recommend charging late payment interest. It is a judgment originating from the necessities of trade life.
As a matter of fact, it is a permission. That is, a Muslim can sell his goods on deferred payment adding an extra amount to the price. However, if he sells goods to poor customers on deferred payment without adding an extra amount, it is definitely a praiseworthy act. It can even be said that with such a sale, he gets reward as if he lent money to his customer without interest qard hasan. The reward of it is mentioned several times both in the Quran and in the hadiths; and Muslims are advised to do it.
Therefore, it is a good and praiseworthy act for Muslims to help each other with the feelings of mutual love, affection and fraternity whenever possible and for the rich to help the poor as much as they can. Skip to main content. Log in Create new account Random Question. I want to ask a question. Future and Options Trading. Details of the Question. FAQ in the category of Halals - Harams. In order to make a comment, please login or register. There are so many banks that claim to be "Islamic", that is "Interest Free" banking.
Could you explain please which banks are preferable? Questions on Commercial Ethics Is it permissible to buy and sell things interest-free using credit cards?
If yes, are there things to take care of? If yes, what are they? Mortgages, halal or haram? Is it permissible to buy and sell foreign currency? Is it permitted to practice as a mortgage associate? Which type of Riba is Al-riba? Is it permissible to try to deter the rivals from future in option trading a contract by offering money? Is it permissible to buy the goods from someone who is known to have gained the goods future in option trading a forbidden and unlawful way?
What should economic systems, principles and basic rules be like according to Islam? What is necessary to do in order to stop using alcohol?
Open Interest is the third most important indicator after price future in option trading volume. It is defined as is the number of contracts outstanding at the end of a day. Open Interest is very important for any Future and Option Trader. To understand open interest, lets first understand how Futures and Options are traded. Futures and Options are created out of thin air when two traders enter into opposite sides of the agreement.
If we take the example of options, because options are created out of thin air, when you trade an option, you are either entering into the contract or getting out of it. How Open Future in option trading is calculated Open interest goes future in option trading or down based on how many new traders are entering the market and how many old traders are leaving.
The total number held by buyers or sold short by sellers on any given day. The open interest number gives you the total number of longs, and the total number of shorts. For example, if two traders are initiating a new position one new buyer and one new seller future in option trading, open interest will increase by one contract. If both traders are closing an existing or old future in option trading one old buyer and one old seller open interest will decline by one contract.
The third and final possibility is one old trader passing off his position to a new trader one old buyer sells to one new buyer. In this case the open interest will not change.
This can be summarized in the following table:. For those of you who are familiar with volume, the interpretation of open interest movements along with price are very similar to volume. Just as when price goes up on rising volume, it is a bullish sign; so it future in option trading with open interest. In fact, here are the rules for trading with open interest:.
With the introduction of intraday data for futures and options in Investar, you can now use the intraday screener to scan all the NSE futures for those futures that are gaining on high open interest in intraday specifically in 5-min, min, min and min timeframes.
This can give an additional confirmation, e. Open interest also gives you key information regarding the liquidity of a future or option. If there is no open interest for an option, there is no liquidity for that option. When options have large open interest, future in option trading means they have a large number of buyers and sellers, and hence more liquidity and this will increase the odds of getting option orders filled at good prices.
So, all other things being equal, the bigger the open interest, the easier it will be to trade that option at a reasonable spread between the bid and ask. Volume for a futures contract is simply the number of contracts that have been traded on a particular day. Volume does not distinguished between how many contracts were opened or closed long or short. It also does not give a clear picture about how many contracts were opened and are still open in the market, while Open Interest is a cumulative total of all the open contracts at the end of the day.
While volume will reset each day, the open interest future in option trading over to the next day. Your email address will not be published. This can be summarized in the following table: In fact, here are the rules for trading with open interest: Price Open Interest Interpretation Rising Rising Bullish Rising Falling Bearish Falling Rising Bearish Falling Falling Bullish With the introduction of intraday data for futures and options in Investar, you future in option trading now use the intraday screener to scan all the NSE futures for those futures that are gaining on high open interest in intraday specifically in 5-min, min, min and min timeframes.
Differences between Open Interest and Volume Volume for a futures contract future in option trading simply the number of contracts that have been traded on a particular day. Always to the Point n informative……… A true follower of yours …. Well described about Future and Option — Keep updating us. Leave a Reply Cancel reply Your email address will not be published.