Charles Schwab, the U.S. brokerage giant, is teaming up with Cboe Global Markets to introduce event-based options tied to the S&P 500 index, marking its formal entry into the prediction market space. The product uses a yes-or-no binary option structure, strictly limited to financial events — no political or sports bets — as the firm navigates the line between investing and gambling.
S&P 500 Binary Options: How They Work
Reported by the Wall Street Journal on June 19, Schwab aims to roll out these contracts to its clients in the coming months. Investors will bet on whether the S&P 500 will be above or below a specific target on expiration. Correct predictions pay a fixed amount; wrong ones lose the stake. Additionally, a “Plus Zone” feature under discussion would allow partial payouts for near-miss predictions.
Compliance First: No Politics, No Sports
Unlike Polymarket or Kalshi, which thrive on election and pop-culture wagering, Schwab is taking a conservative route. All contracts will be based solely on objectively verifiable financial events — no political elections, sports outcomes, or other non-financial domains. This aligns with U.S. regulatory expectations and Schwab’s own risk appetite.
Prediction Market Race Heats Up
Schwab had previously viewed such products skeptically, but now sees inevitable demand for event-driven trading. Competitors like Coinbase and Robinhood are also expanding their prediction offerings. With Schwab’s massive retail base and Cboe’s infrastructure, the battle for the prediction market — once a crypto niche — is now a full-scale Wall Street showdown.