Cboe Global Markets has announced plans to launch a
prediction market framework that allows traders to take positions on market
outcomes beyond the traditional binary payout. The contracts are designed to
expand outcome-based trading by providing payouts even when predictions are
only partly correct.
Prediction markets have attracted retail traders, with platforms
like Robinhood and Kalshi reporting strong uptake. Exchanges including
Intercontinental Exchange and CME Group have also tested similar products,
integrating event-based instruments into regulated markets and complementing
traditional derivatives and options strategies.
New ‘Payout Zone’
Most event contracts currently offer only two outcomes: a
full payout if correct, or nothing if wrong. Cboe’s framework introduces a
third option. Contracts would settle at $0, a partial payout within a defined
“payout zone,” or a full $100 payout. The exchange said this allows traders to
benefit when predictions are directionally correct, even if the exact target is
missed.
JJ Kinahan, Head of Retail Expansion and Alternative
Investment Products at Cboe, said the contracts “take the mechanics of a
traditional vertical spread” and package them “in an intuitive, accessible
format for a broader audience.” He added they provide defined risk and allow
traders to “earn a partial return when traders are directionally correct.”
🔥CBOE TO REVIVE ALL-OR-NOTHING OPTIONS AMID PREDICTION MARKET BOOMCboe Global Markets is in early talks with brokerages to bring back all-or-nothing binary options, aiming to meet rising demand for yes-or-no wagers in financial markets.The exchange is also discussing… pic.twitter.com/ephZ8DW6hH
— Coin Bureau (@coinbureau) February 2, 2026
Mini S&P 500 Contract
The first contract will be a Mini S&P 500 Index
prediction market product. It allows traders to take positions on where the
index may close at the end of a trading day. Participants can choose a
traditional “yes” or “no” position. Alternatively, they can use the payout zone
to reduce losses if the index moves in the expected direction but does not
reach the exact level.
The contract will use a traditional options structure with
fixed returns and settle in cash. Cboe said it will list the product on the
Cboe Options Exchange, with clearing through the Options Clearing Corporation.
The launch is expected in the second quarter of 2026.
SPX Prediction Contracts Target Short-Dated Options
Cboe linked the product to retail demand for short-dated
S&P 500 options, which averaged 580,000 vertical spread contracts per day
in 2025. Rob Hocking, Global Head of Derivatives at Cboe, said there is “clear
customer demand to trade around market events tied to the S&P 500 Index,”
and the contracts are built “directly on top of the SPX options ecosystem.”
Cameron Drinkwater of S&P Dow Jones Indices said the
contracts allow new investors access through a simple structure. James
Kostulias of Charles Schwab said the brokerage expects to support the products
if client demand develops. Cboe may extend the framework to other indices or
stocks in the future.
This article was written by Tareq Sikder at www.financemagnates.com.
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