- The firm plans binary-style S&P 500 options with fixed payouts.
- It marks its entry into the fast-growing prediction market space.
Charles Schwab is preparing to introduce a new type of options contract tied to the S&P 500, marking its first step into prediction-style trading, according to a Wall Street Journal report. The brokerage is working with Cboe Global Markets on the product, which would allow clients to take simple positions on index outcomes.
The planned contracts would let traders decide whether the S&P 500 will close above or below a specific level. Each trade would have a clear outcome. It would either pay a fixed cash amount or expire worthless.
This structure differs from traditional options, which often involve more complex pricing and strategies. It also contrasts with platforms such as Kalshi and Polymarket, where users trade contracts linked to events like elections or economic data.
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Cboe Collaboration And Expansion Plans
Schwab intends to focus only on financial outcomes that can be verified through market data. The firm does not plan to offer contracts tied to politics, sports, or other non-financial events.
Schwab is developing the offering with Cboe Global Markets, a major options exchange operator. The two firms are also discussing a variation linked to Cboe’s Plus Zone feature. This feature would allow partial payouts if a trade comes close to the target level. It reduces the all-or-nothing nature of binary-style contracts.
The companies have also discussed expanding the product to other indices and financial benchmarks beyond the S&P 500. Schwab’s move follows similar steps by Coinbase and Robinhood, which have recently introduced prediction market products. The sector has attracted growing interest from retail traders seeking simpler, event-driven ways to trade market outcomes.
