The Wall Street Journal reports that Charles Schwab is working with Cboe Global Markets to launch a new type of options contract that allows clients to bet yes or no on the performance of the S&P 500, marking the firm’s first foray into prediction markets.
The feature is expected to roll out to Schwab customers in the coming months, the magazine reported, citing people familiar with the matter.
Unlike traditional prediction market platforms such as Polymarket or Kalshi, which typically offer futures-style contracts tied to the outcome of an event, Schwab’s product works like a binary option, where the contract pays a fixed cash amount or expires worthless depending on whether the S&P 500 moves above or below a specified target price.
Schwab and Cboe are also in talks to offer similar products related to Cboe’s feature known as “Plus Zone.” This allows traders to receive partial payouts if their predictions are close to the final outcome, even if the index does not finish exactly at the target level.
