ChainCatcher, citing a report from The Wall Street Journal, said Charles Schwab is working with Cboe Global Markets on plans to launch binary options contracts linked to the S&P 500 index. The contracts would allow clients to make “yes or no” wagers on the performance of the index, with the outcome tied to whether the index closes above or below a specified target level.
Contracts would pay a fixed cash amount when conditions are met
According to the report, the planned contracts differ somewhat from the futures contracts offered by platforms such as Kalshi and Polymarket, but they are essentially binary options in structure. If the S&P 500 closes above or below the target price set by the contract, the position pays a fixed cash-settled amount. If the required condition is not met, the contract expires with no value.
Schwab also plans to launch Cboe’s “Plus Zone” feature alongside the contracts. Under that feature, clients whose directional forecast is correct but who do not precisely hit the target price can still receive a partial payout. In other words, the design described in the report includes a mechanism that can provide partial compensation when the direction is right even if the exact target is missed.
Schwab limits the planned products to financial events
Charles Schwab CEO Rick Wurster had previously criticized sports and entertainment event contracts, saying they blur the line around investing. At the same time, he said the company would consider offering related products if prediction markets became a “competitive necessity” in the brokerage industry.
The contracts described in the report will be strictly limited to events with verifiable outcomes in the financial sector. They will not involve non-financial events such as the World Cup or the Oscars. Compared with prediction-market venues such as Kalshi and Polymarket, Schwab’s planned collaboration with Cboe is focused on financial binary contracts within a brokerage context, centered on market outcomes such as the S&P 500 index.