Charles Schwab Partners with Cboe Global Markets to Launch New Options Contract

Charles Schwab is teaming up with Cboe Global Markets to introduce a novel type of options contract that enables customers to place yes-or-no bets on the performance of the S&P 500. This move marks Schwab’s foray into the realm of prediction markets, as reported by the Wall Street Journal.

According to sources familiar with the matter, this new feature is slated to be available to Schwab clients in the near future. Unlike traditional prediction market platforms like Polymarket and Kalshi, which typically offer futures-style contracts linked to the outcome of events, Schwab’s offering will operate more like a binary option. In this scenario, the contract will either pay out a fixed cash amount or expire without value based on whether the S&P 500 closes above or below a specified target price.

Furthermore, Schwab and Cboe are currently discussing the possibility of launching a similar product tied to Cboe’s “Plus Zone” feature. This feature would allow traders to receive a partial payout if their prediction is close to the final outcome, even if the index does not precisely hit the target level.

This collaboration between Charles Schwab and Cboe Global Markets signifies a significant step towards offering innovative investment opportunities to clients. By venturing into the prediction market business, Schwab aims to provide its customers with a unique way to engage with the financial markets and potentially profit from their predictions.