Charles Schwab is partnering with Cboe Global Markets to launch a new type of options contract that lets customers make yes-or-no wagers on the performance of the S&P 500 — the brokerage's first move into prediction markets, per a Wall Street Journal report. The feature is expected to roll out to Schwab customers in the coming months. Unlike traditional prediction-market platforms such as Polymarket and Kalshi, which typically offer futures-style contracts on event outcomes, Schwab's product would function as a binary option — paying a fixed cash amount or expiring worthless depending on whether the S&P 500 closes above or below a specified target.
What's the binary-option structure? The contract pays a fixed amount or zero based on whether the S&P 500 closes above or below a preset level, per Cointelegraph. The binary mechanic is distinct from the futures-style architecture Polymarket and Kalshi use, where contracts trade between 0 and 100 cents through the event cycle.
What's the Plus Zone feature? Schwab and Cboe are also in talks to offer a similar product tied to Cboe's "Plus Zone" feature — a partial payout when a prediction is close to the final outcome, even if the index does not finish exactly at target. The partial-payout structure introduces a gradient between binary win/loss outcomes.
What's the political-markets carve-out? Schwab plans to focus on financial-benchmark events while avoiding markets tied to politics, sports or other non-financial events, per Decrypt. The deliberate carve-out distinguishes the product from the space's most controversial use cases — particularly election betting.
What's the broader race? Coinbase and Robinhood have both expanded in the prediction-markets sector. The Schwab entry adds a major retail brokerage with broad mainstream-investor distribution to a space previously concentrated in crypto-adjacent platforms.
Why is Cboe the partner of choice? Cboe Global Markets operates Cboe Options Exchange and is the parent of the S&P 500 options ecosystem. Pairing with Cboe gives Schwab both the index-derivative infrastructure and the regulatory clearance of a CFTC-supervised options venue — distinguishing the product from CFTC-litigation-prone event-market platforms.
Where does this leave Polymarket and Kalshi? Both remain dominant in non-financial event markets — particularly political and sports outcomes — but the financial-benchmarks segment now has a major mainstream brokerage entering the space.
Figures referenced: none. — JudgeMarket.
