Option Contract in Islamic Finance

Abstract

The first part of the paper provides a background on Shari’ah, and Islamic Finance. Next, the paper introduces option contract, and briefly discusses its benefits. Third part of the paper introduces the pro-options and anti-options views among Muslim jurists. Lastly, the paper describes the common form of Shari’ah-compliant options available in the market. A brief discussion of the options in Islamic Finance, presented in this paper, shows that Islamic Finance industry and some Muslim jurists have appreciated the need for Shari’ah-compliant alternative to conventional options.