The following question and answer by Sheikh Yusuf Talal DeLorenzo attendees of the Dow Jones University Courses on Islamic Investement.
Question:: Is covered option Islamic? Why or why not?
Answer: An option, whether covered or naked, differs fundamentally from a stock. A stock representsa share in ownership, equity, of a real company producing goods or services and generally contributingto the economy in a substantial manner. When you buy stock, you help to raise capital for business,