Short answer
Conventional futures are not halal in the mainstream Hanafi view: both the price and the goods are deferred, most contracts are never meant to be delivered, and traders sell what they do not own. Islam has its own forward contracts, salam and istisna', which are allowed under strict conditions.
A sale in which both counter-values are deferred (bay' al-kali' bi al-kali') is invalid, and goods may not be resold before they are owned and possessed, so standard futures are impermissible. Salam (full price paid now for specified goods delivered later) and istisna' (commissioned manufacture) are the valid alternatives.
The four schools agree on this.
Explanation
A futures contract is an agreement today to buy or sell a commodity, index or currency at a set price on a future date. Neither side pays the price now and nothing is delivered now. Most traders close out before expiry and settle only the price difference.
Why the mainstream view forbids them:
- Both sides deferred. A sale where neither the goods nor the price is handed over is a debt for a debt, which the jurists of all schools reject.
- Selling before owning and possessing. The Prophet ﷺ said whoever buys food should not sell it until he has received it in full. Futures are bought and sold many times over before anything exists in anyone's hands.
- Speculation close to gambling, especially with leverage, and in crypto "perpetual futures" with funding payments and liquidations.
Mufti Taqi Usmani and the AAOIFI standards rule conventional futures impermissible. A few contemporary economists and scholars have argued that some futures used to hedge real business can be accepted with conditions, but this is a minority view.
The halal forward contract is salam: the Prophet ﷺ allowed paying in advance for goods of a known quantity and weight to be delivered at a known date. The buyer pays the full price now, and cannot resell the goods before receiving them. Istisna' works similarly for things that must be made. For shares and options, see Is day trading halal?
The evidence
Quran, Surah Al-Baqara 2:282
يَٰٓأَيُّهَا ٱلَّذِينَ ءَامَنُوٓا۟ إِذَا تَدَايَنتُم بِدَيْنٍ إِلَىٰٓ أَجَلٍۢ مُّسَمًّۭى فَٱكْتُبُوهُ ۚ وَلْيَكْتُب بَّيْنَكُمْ كَاتِبٌۢ بِٱلْعَدْلِ ۚ وَلَا يَأْبَ كَاتِبٌ أَن يَكْتُبَ كَمَا عَلَّمَهُ ٱللَّهُ ۚ فَلْيَكْتُبْ وَلْيُمْلِلِ ٱلَّذِى عَلَيْهِ ٱلْحَقُّ وَلْيَتَّقِ ٱللَّهَ رَبَّهُۥ وَلَا يَبْخَسْ مِنْهُ شَيْـًۭٔا ۚ فَإِن كَانَ ٱلَّذِى عَلَيْهِ ٱلْحَقُّ سَفِيهًا أَوْ ضَعِيفًا أَوْ لَا يَسْتَطِيعُ أَن يُمِلَّ هُوَ فَلْيُمْلِلْ وَلِيُّهُۥ بِٱلْعَدْلِ ۚ وَٱسْتَشْهِدُوا۟ شَهِيدَيْنِ مِن رِّجَالِكُمْ ۖ فَإِن لَّمْ يَكُونَا رَجُلَيْنِ فَرَجُلٌۭ وَٱمْرَأَتَانِ مِمَّن تَرْضَوْنَ مِنَ ٱلشُّهَدَآءِ أَن تَضِلَّ إِحْدَىٰهُمَا فَتُذَكِّرَ إِحْدَىٰهُمَا ٱلْأُخْرَىٰ ۚ وَلَا يَأْبَ ٱلشُّهَدَآءُ إِذَا مَا دُعُوا۟ ۚ وَلَا تَسْـَٔمُوٓا۟ أَن تَكْتُبُوهُ صَغِيرًا أَوْ كَبِيرًا إِلَىٰٓ أَجَلِهِۦ ۚ ذَٰلِكُمْ أَقْسَطُ عِندَ ٱللَّهِ وَأَقْوَمُ لِلشَّهَٰدَةِ وَأَدْنَىٰٓ أَلَّا تَرْتَابُوٓا۟ ۖ إِلَّآ أَن تَكُونَ تِجَٰرَةً حَاضِرَةًۭ تُدِيرُونَهَا بَيْنَكُمْ فَلَيْسَ عَلَيْكُمْ جُنَاحٌ أَلَّا تَكْتُبُوهَا ۗ وَأَشْهِدُوٓا۟ إِذَا تَبَايَعْتُمْ ۚ وَلَا يُضَآرَّ كَاتِبٌۭ وَلَا شَهِيدٌۭ ۚ وَإِن تَفْعَلُوا۟ فَإِنَّهُۥ فُسُوقٌۢ بِكُمْ ۗ وَٱتَّقُوا۟ ٱللَّهَ ۖ وَيُعَلِّمُكُمُ ٱللَّهُ ۗ وَٱللَّهُ بِكُلِّ شَىْءٍ عَلِيمٌۭ ﴿٢٨٢﴾
O you who have believed, when you contract a debt for a specified term, write it down. And let a scribe write [it] between you in justice. Let no scribe refuse to write as Allah has taught him. So let him write and let the one who has the obligation dictate. And let him fear Allah, his Lord, and not leave anything out of it. But if the one who has the obligation is of limited understanding or weak or unable to dictate himself, then let his guardian dictate in justice. And bring to witness two witnesses from among your men. And if there are not two men [available], then a man and two women from those whom you accept as witnesses - so that if one of the women errs, then the other can remind her. And let not the witnesses refuse when they are called upon. And do not be [too] weary to write it, whether it is small or large, for its [specified] term. That is more just in the sight of Allah and stronger as evidence and more likely to prevent doubt between you, except when it is an immediate transaction which you conduct among yourselves. For [then] there is no blame upon you if you do not write it. And take witnesses when you conclude a contract. Let no scribe be harmed or any witness. For if you do so, indeed, it is [grave] disobedience in you. And fear Allah. And Allah teaches you. And Allah is Knowing of all things.
Deferred obligations are allowed within the rules, such as salam.
Sahih al-Bukhari 2240
Sahih... من أسلف في شيء ففي كيل معلوم ووزن معلوم إلى أجل معلوم ...
"Whoever pays in advance for something should do so for a known measure, a known weight and a known term."
Salam is the lawful forward sale, with the price paid now.
Sahih al-Bukhari 2136
Sahih... من ابتاع طعاما فلا يبعه حتى يستوفيه ...
"Whoever buys food should not sell it until he has received it in full."
Reselling before possession, as futures do, is not allowed.
Sunan Abi Dawud 3503
Graded sahih... لا تبع ما ليس عندك ...
"Do not sell what you do not have."
Short futures sell what the trader does not own.
Where the ruling is recorded
- al-Hidaya, Kitab al-Buyu', Bab al-Salam. The conditions of salam, including full payment of the price in the session.
- AAOIFI Shariah Standards, Standard No. 20, Sale of Commodities in Organised Markets. Rules that futures contracts, as practised, are not permissible.
Checked by our team. For a more accurate answer to your own situation, consult a scholar. Quran translation by Sahih International. Hadith Arabic from the standard editions of the six books and the Muwatta, with gradings as recorded there; the English is our own rendering. Spotted a mistake? Tell us.