- Charles Schwab is preparing to launch binary-style options linked to the S&P 500 in partnership with Cboe Global Markets.
- The product will allow traders to make yes-or-no predictions on whether the index closes above or below a specified target level.
- Schwab is expected to roll out the offering to customers in the coming months.
- The move marks Schwab’s first entry into prediction markets, a sector that has seen growing participation from retail and crypto-focused platforms.
- Schwab plans to focus on contracts tied to objectively verifiable financial market outcomes rather than political or sports-related events.
Schwab Expands Into Prediction Markets With S&P 500 Contracts
Charles Schwab is working with Cboe Global Markets to introduce a new category of options contracts that would allow investors to make binary predictions on the performance of the S&P 500, according to a Wall Street Journal report citing people familiar with the matter.
The product is expected to become available to Schwab customers in the coming months and would represent the brokerage firm’s first move into the rapidly growing prediction markets industry.
Unlike traditional prediction market platforms that generally offer futures-style contracts tied to event outcomes, Schwab’s proposed product would operate more like a binary option. Under the structure being discussed, traders would receive a fixed cash payout if the S&P 500 closes above or below a predetermined target level. Contracts that do not meet the specified outcome would expire without value.
The initiative reflects growing interest among major financial firms in event-based trading products as investors increasingly seek new ways to express market views beyond conventional stocks, options, and futures.
Cboe ‘Plus Zone’ Feature Could Offer Partial Payouts
According to the report, Schwab and Cboe are also discussing a related product tied to a Cboe feature known as the “Plus Zone.” The structure would allow traders to receive a partial payout when their prediction comes close to the final market outcome, even if the index does not finish exactly at the target level.
The companies have reportedly explored expanding the offering beyond the S&P 500 to include additional market indexes and financial benchmarks. However, Schwab’s current focus remains on contracts linked to measurable financial-market events with objectively verifiable outcomes.
The brokerage does not plan to enter markets tied to politics, sports, or other real-world events that have become common on some prediction-market platforms.
Industry Growth Draws New Entrants
Schwab’s planned launch comes as prediction markets continue to attract attention from both traditional finance and cryptocurrency-related companies.
Platforms such as Polymarket and Kalshi have experienced increased trading activity as users speculate on elections, economic indicators, and other event outcomes. More recently, retail trading and crypto firms have also expanded into the sector, with Coinbase and Robinhood introducing prediction-market offerings.
Polymarket currently reports significant platform activity, with total value locked reaching approximately $440.84 million. The platform has generated annualized fees of $96.55 million and annualized revenue of $137.65 million. During the past 30 days, Polymarket processed $3.627 billion in decentralized exchange trading volume and $8.944 billion in notional volume. Open interest stood at $458.82 million, while cumulative funding reached $2.879 billion.
Recently, Polymarket is facing increased scrutiny after reports revealed undisclosed payments to influencers for promoting the platform on X, raising concerns about transparency in crypto-related marketing practices. On May, regulators and compliance experts are intensifying pressure on the prediction market platform to strengthen Know Your Customer (KYC) procedures as it expands globally amid growing regulatory risks.
Kalshi has also recorded strong participation. Over the last 30 days, the platform processed $7.331 billion in trading volume and $22.768 billion in notional volume. Open interest reached $1.161 billion, reflecting substantial active positions across its event-based markets. The company has raised a cumulative $2.685 billion to support continued growth in regulated prediction-market products.
Kalshi surpassed $2 billion in cumulative revenue in June, marking a major milestone as the regulated prediction market platform reportedly began exploring potential IPO opportunities. The growth comes amid continued regulatory scrutiny as event-based trading markets attract increasing participation from retail and institutional users.
During the same month, Kalshi introduced new employment verification requirements for certain higher-risk prediction markets, aiming to strengthen compliance controls and market integrity. The measures reflect the platform’s efforts to address regulatory concerns while expanding its product offerings.
Schwab’s planned rollout highlights how established brokerages are increasingly exploring prediction-style trading products as demand grows for contracts tied to clearly defined market outcomes.
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