Introduction

Futures trading has become common in crypto, commodities, stocks, and other markets, thanks to the emergence of online trading platforms. But when it comes to the question whether it is halal or haram, many Muslims are confused. Some fatwas say it’s haram. Others online articles claim it’s halal — even quoting scholars out of context.
This blog give the most crystal-clear explanation on why futures contracts are not Halal— and why many existing Shariah scholars and fatwas fail to explain the real issues correctly.

What Is a Futures Contract?

Let’s first understand what a futures contract is — without technical jargon.

A futures contract is a deal between two parties to buy or sell an asset at a future date for a pre-agreed price. It’s not a purchase today. It’s a promise that automatically becomes a binding sale in the future. The price of the asset is fixed today.

For example:

• Today, you agree to sell (or buy) 1 BTC for $100,000 on a future date — say, 3 months later. No exchange of price or BTC today, only a promise that it is considered a contract!
• That contract is now locked, and you must sell (or buy) at that future date — no new negotiation.

You can even trade that contract with others on an exchange, just like buying and selling a product. Sounds useful, right? But here’s why it violates Shariah principles.

Why Futures Contracts Are Not Halal in the First Place

Let’s break this down into simple and clear reasons:

1. It’s a Binding Promise Treated Like a Sale Contract

In reality, a futures contract is not an actual sale because there is no exchange of countervalues (price and asset) now— it’s just a promise to sell (or buy) in the future. But this promise is binding on both parties, which makes it behave like a contract. And in Islamic law, if nothing is exchanged now, and both countervalues are delayed, then it is not a valid contract.[1] All the Islamic jurists agree on this opinion.[2]

2. It’s not a Valid Salam Contract

Some may argue that there is an Islamic contract, called Salam, in which the delivery of the asset can be delayed. It is allowed in Shariah. This is correct. But among the fundamental conditions for a valid Salam contract is that the full price of the asset must be paid to the seller on the spot. Otherwise, this Salam contract is invalid.[3] In futures contract, the full price is not paid immediately at the time of the agreement, so, it cannot be considered valid.

3. The Buyer Doesn’t Own the Asset at the Time of the Agreement

Another issue with futures contracts is that most of the time, the seller does not own the asset at the time of the agreement. This is the direct violation of the hadith:

حَدَّثَنَا مُسَدَّدٌ، حَدَّثَنَا أَبُو عَوَانَةَ، عَنْ أَبِي بِشْرٍ، عَنْ يُوسُفَ بْنِ مَاهَكَ، عَنْ حَكِيمِ بْنِ حِزَامٍ، قَالَ يَا رَسُولَ اللَّهِ يَأْتِينِي الرَّجُلُ فَيُرِيدُ مِنِّي الْبَيْعَ لَيْسَ عِنْدِي أَ فَأَبْتَاعُهُ لَهُ مِنَ السُّوقِ فَقَالَ ‏ “‏ لاَ تَبِعْ مَا لَيْسَ عِنْدَكَ‏”‏‏.‏

Narrated Hakim ibn Hizam:

Hakim asked (the Prophet): Messenger of Allah, a man comes to me and wants me to sell him something which is not in my possession. Should I buy it for him from the market? He replied: Do not sell what you do not possess. (Sunan Abi Dawud 3503, https://sunnah.com/abudawud:3503)

4. The Sale Happens in the Future Automatically

In Islamic law, for a sale to be valid, both the offer (Ijab) and acceptance (Qubul) must happen in the present — with ownership of the asset and price transferring immediately. Or at least one of them should be exchanged on the spot, and the parties should agree to deliver the other countervalue on a deferred date, as allowed in other Islamic contracts.

But in futures contracts:

• The sale happens automatically at the time of the futures contract maturity (expiry).
• There’s no new contract at that time.
• The parties are forced to execute a sale that never took place in the past in the proper Shariah format.

This is not allowed in Shariah because a new sale contract should be signed when the asset is available, and both parties agree on the price at that time.

3. Futures Contracts Are Traded — and That’s Invalid in Shariah

One of the biggest problems is that people trade the futures contracts themselves — just like a good or item. This means the futures contract becomes a product in itself for buying and selling. Note that it is completely different from buying and selling the underlying assets. So, the main Shariah issues are:

• A promise is not a valid item to be sold.
• You can’t buy or sell a valid contract, let alone an invalid one.
• You can’t receive money in exchange for something that has no valid ownership or substance.

So, when you sell a futures contract, you’re selling a mere legal obligation, not a real asset; and that legal obligation is also invalid in the eye of Shariah. Since, it’s unacceptable in Shariah, the compensation you receive for it is also impermissible.

So, What’s the Final Verdict?

✅ Futures contracts are not Halal (Shariah-compliant) for the following reasons:

• They bind a promise and treat it as an enforceable sale contract — which is not allowed in Islamic law.
• Even if we treat it as a sale contract, not as a promise, it does not fulfill the Shariah requirements for a valid sale contract.
• The sale happens in the future automatically — without a proper contract at that time.
• The contract itself is traded, making it a sale of something invalid (a mere promise).

These core problems are ignored or misunderstood in many fatwas and online claims. Some opinions quote scholars out of context — leading to confusion among sincere Muslim investors.

What About Interest (Riba) and Speculation (Gambling)?

Some scholars have argued that futures contracts are impermissible because they involve:

• Riba (interest) in cash-settled contracts, and
• Excessive speculation, which resembles gambling (Maysir).

In response, some proponents claim:

• “If the contract is somehow settled without interest, like it is avoided completely, and speculation is a normal part of any business, then it should be halal.”

While this sounds reasonable, it misses the point. These concerns — Riba and gambling — are secondary issues. Even if they are somehow removed, the core structure of the futures contract remains problematic in Shariah.

Why? Because of the previously mentioned Shariah issues. So even if a futures contract somehow avoids Riba and reduces gambling, it still violates key contractual principles of Islamic law. That’s the main reason why it cannot be made halal.

Conclusion: Don’t Be Misled by Misinformation

The issue of futures trading is not about market speculation or risk only. It is about the structure and nature of the contract itself.

If the foundation is invalid in Shariah, the contract cannot be made halal — no matter how beneficial it seems.

At Azka Advisors, we believe in clarity, authenticity, and trustworthy Shariah guidance.
We urge Muslim investors and platforms to avoid futures contracts and instead focus on halal alternatives such as spot trading or Islamic structured contracts like Salam or Istisna’ (with proper compliance).

[1] Fiqh Al-Buyu’ by Mufti Taqi Usmani, p. 383-384

[2] Fiqh Al-Islami by Dr Wahba Al-Zuhaily, p.109

[3] Fiqh Al-Buyu’ by Mufti Taqi Usmani, p. 564; Fiqh Al-Islami by Dr Wahbah Al-Zuhaily, p. 239