Charles Schwab is working with Cboe Global Markets to launch a new type of options contract that will allow clients to place yes-or-no bets on the performance of the S&P 500, marking the brokerage’s first foray into prediction markets, The Wall Street Journal reports.
The feature is expected to roll out to Schwab clients in the coming months, the Journal reported, citing people familiar with the matter.
Unlike traditional prediction market platforms like PolyMarket and Kalashi, which typically offer futures-style contracts tied to the outcome of events, Schwab’s product will operate like a binary option, in which the contract will 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 called “Plus Zone”, which would allow traders to receive partial payouts when their predictions get close to the final outcome, even if the index does not end up exactly at the target level.