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Risk Management in financial transactions: A comparative study of Khiyar-e-Shirt and Call option

Abstract

Sharia has five major objectives and the protection of wealth is one of these. So, a person who is not an expert in financial transactions has the risk of being deceived by someone while buying and selling anything. For protecting non-expert people or choosing a good decision, Islam gives the concept of Option (Khiyar) which means to choose or select the retaining or rejecting of a transaction. Conversely, in the current financial market, similar options are available to protect buyers and sellers from any financial risk in buying or selling a specific thing. Both the Options i.e., Sharia and conventional ones have many kinds, but in this paper, only Khiyar-e-Shart from Sharia options and Call option from conventional options are comparatively discussed. In this comparison, the researcher opted descriptive and analytical method by which the lexical and technical meanings of both the options along with their conditions and other formalities are elaborated. Finally, it is proved that the Call option is unlawful in Sharia and it can be placed by Bay-e-Urboon.

Keywords

Risk management, Khiyar-e-shirt, Call option

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