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Abstract

Options represent a category of financial derivatives whose value is derived from an underlying asset, such as common stocks, stock indices, commodity futures, or debt instrument futures. Although historical evidence suggests that option trading dates back to the early sixteenth century, the market witnessed explosive growth following the organizational innovations introduced by the Chicago Board Options Exchange (CBOE) in 1973, which coincided with the inauguration of the first organized options market. This success is further evidenced by the global expansion of dedicated options exchanges. A primary advantage of options lies in their ability to modify the probability distribution of returns for common stock investments, offering investors a diverse array of risk-return combinations that would be unattainable otherwise. This critical feature has prompted researchers to explore strategies for mitigating the inherent risks of equity investment, which remains a dominant characteristic of modern financial markets. Consequently, options continue to command significant academic and professional attention from both hedgers and speculators. Given their absence in Arab financial markets and the novelty of their multifaceted concepts, further clarification—starting with their fundamental definitions and market structures—is essential. Parallel to these developments, Islamic banking evolved from conceptual frameworks in the mid-twentieth century into a robust reality, beginning with the Mit Ghamr savings project in 1963, followed by the establishment of the Islamic Development Bank in 1975 and Dubai Islamic Bank in 1977. Since the 1980s, the sector has expanded remarkably, now encompassing over 160 institutions worldwide with investments totaling approximately $60 billion.

DOI

10.33095/jeas.v14i50.1399

Subject Area

Managerial

First Page

22

Last Page

51

Rights

http://creativecommons.org/licenses/by-nc-nd/4.0

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