In the world of Islamic finance, few instruments attract as much scrutiny as financial options. Traditionally, these derivatives are flagged for Shariah non-compliance, wherein concerns are primarily around its usage for speculation and the uncertainty of outcomes when used for speculative purposes due to their inherent reliance on speculation (maysir) and uncertainty (gharar).

However, financial innovation allows us to separate a tool from its typical use case. The KraneShares Wahed Alternative Income Index ETF (Ticker: KWIN) utilizes exchange-listed options not for speculation, but purely as execution mechanisms to facilitate a Shariah-compliant trade structure known as Bayʿ Muʾajjal (fixed-price deferred sale).

This paper examines the technical distinction between permissible hedging instruments and prohibited speculative derivatives, outlining precisely how KWIN is structured in line with established Shariah standards and principles

For KWIN standard performance, top 10 holdings, risks, and other fund information, please click here.