Charles Schwab is collaborating with Cboe Global Markets to introduce binary options that would let clients place yes-or-no wagers on the performance of the S&P 500, according to people familiar with the matter.
The proposed contracts would be structured as all-or-nothing instruments that deliver a set cash settlement if the index satisfies the contract condition, and no payment if it does not. Schwab plans to make these binary options available to customers in the coming months, the sources said.
A representative for Charles Schwab did not immediately respond to a request for comment. One person familiar with the discussions confirmed that Cboe is working with Schwab to offer the products but declined to provide further details.
In addition to the straight binary contracts, Schwab is preparing an options offering that incorporates a Cboe feature designed to provide a partial payout when a trader is largely correct even if the closing index price is not precisely what was predicted. The feature would allow some degree of payoff short of an exact match to the contract condition.
The move comes amid a broader rise in interest for prediction-style markets. These trading formats surged in popularity around the 2024 U.S. presidential election and have since been treated as an asset class enabling wagers on a range of events, from monetary policy decisions to sports tournaments.
Other retail trading platforms have started offering event contracts in recent months; firms including Robinhood and Interactive Brokers have rolled out similar products aimed at giving users direct access to outcome-based trades.
What this means
- Schwab and Cboe are developing binary, all-or-nothing contracts tied to the S&P 500 that are expected to be available in coming months.
- Schwab is also preparing an options product with a Cboe mechanism that can pay partial returns when a prediction is nearly correct.
- The proposal reflects growing retail interest in prediction markets, which have expanded since the 2024 U.S. presidential election.