Cboe Revives Binary Options After a Decade, Stepping Up Competition With Kalshi and Polymarket
Summary
- Cboe said it is reentering the prediction-market race by relaunching binary options tied to the S&P 500 Index.
- The product will be offered through major brokerages including Interactive Brokers and Charles Schwab as demand for short-term directional investment rises.
- The new product uses an options spread structure, allowing investors to target incremental returns as the index moves in the expected direction, while Nasdaq is also preparing a similar offering that could intensify competition.
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Cboe Global Markets is reentering the prediction-market arena after more than a decade by relaunching binary options.
Bloomberg reported on June 23 that Cboe plans to list binary options tied to the S&P 500 Index. The contracts allow investors to trade a simple yes-or-no view on whether the S&P 500 will reach a specific price level.
The products will initially be offered through Interactive Brokers. Major brokerages including Charles Schwab are set to support the contracts later.
The launch comes as prediction-market platforms Kalshi and Polymarket gain popularity. Cboe said demand for short-term directional trading has risen sharply since the 2022 debut of zero-day-to-expiration, or 0DTE, options on the S&P 500.
"Demand for products built around predicting short-term outcomes has continued to grow since the success of 0DTE options," JJ Kinahan, Cboe's head of retail expansion and alternative investment products, said. He added that moving into prediction markets was a natural next step.
Cboe previously launched binary options tied to the S&P 500 and the Cboe Volatility Index, or VIX, in 2008. It later discontinued the products because of weak investor interest. Trading in S&P 500 binary options ended in 2015, while the VIX product was halted in 2017.
Unlike existing prediction-market products, the new contracts use an options spread structure. That means investors can do more than simply wager on an outcome: They can also earn incremental returns if the index moves in the direction they expect. Bloomberg also reported that Nasdaq is preparing to launch a similar binary options product this year, setting up a sharper competitive fight in prediction markets.
