Summary

  • Charles Schwab is partnering with Cboe Global Markets to offer new yes-or-no options contracts on the S&P 500, marking the brokerage’s first move into prediction markets.
  • The planned product will function like a binary option, paying a fixed amount or nothing based on whether the index closes above or below a preset level, with rollout to Schwab customers expected in the coming months.
  • Schwab and Cboe are exploring related contracts using Cboe’s Plus Zone feature and may expand to other financial benchmarks, while avoiding markets tied to politics, sports or other nonfinancial events.

Charles Schwab is working with Cboe Global Markets to launch a new type of options contract that would allow customers to make yes-or-no wagers on the performance of the S&P 500, marking the brokerage's first move into prediction markets, according to a Wall Street Journal report.

The feature is expected to roll out to Schwab customers in the coming months, the Journal reported, citing people familiar with the matter.

Unlike traditional prediction market platforms such as Polymarket and Kalshi, which typically offer futures-style contracts tied to the outcome of events, Schwab’s product would function more like a binary option, in which the contract would pay a fixed cash amount or expire worthless depending on whether the S&P 500 closes above or below a specified target price.

Schwab and Cboe are also in talks to offer a similar product tied to a Cboe feature known as the “Plus Zone,” which would allow traders to receive a partial payout when their prediction is close to the final outcome, even if the index does not finish exactly at the target level.

The companies have even discussed expanding the lineup beyond the S&P 500 to other market indexes or financial benchmarks, according to the report. Schwab, however, plans to focus on events with objectively verifiable outcomes in financial markets rather than contracts tied to politics, sports or other real-world events.

The launch would make Schwab the latest entrant in a rapidly expanding prediction markets industry. Platforms such as Kalshi and Polymarket have attracted growing interest from traders seeking to speculate on everything from elections to economic data releases.

Crypto and retail trading firms have also moved into the space. Coinbase (COIN) and Robinhood (HOOD) have both recently introduced prediction market offerings.

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