Charles Schwab is working with Cboe Global Markets to offer options contracts that allow customers to place yes-or-no wagers on the S&P 500, marking the brokerage’s first move into prediction markets.
Unlike the futures-style contracts listed on platforms such as Kalshi and Polymarket, these binary options are structured as options — but the mechanics are functionally comparable: a fixed cash settlement goes to the holder if the S&P 500 closes above or below a predetermined level, and nothing at all if it does not. Schwab plans to make the contracts available to customers in the coming months.
A companion product built around a Cboe feature called the “Plus Zone” is also in the works, according to the The Wall Street Journal; rather than an all-or-nothing result, that contract would deliver a partial payout to traders whose directional call was roughly correct but whose target price was not met precisely. The two companies have also discussed extending the product lineup to other market indexes or financial benchmarks, though Schwab plans to limit its offerings to events with verifiable outcomes in financial markets, steering clear of contracts tied to politics, sports, or entertainment.
Cboe announced in March a prediction markets framework built around a Mini S&P 500 Index contract, with a planned launch in the second quarter of 2026. Under Cboe’s model, contracts can deliver three potential outcomes: no payout, a partial payout within a defined range, or a full $100 payout. The product is listed on Cboe Options Exchange and centrally cleared by OCC, the company said.
“As the leader in retail options trading and a close partner of Cboe, we are pleased to see Cboe continue to innovate in the financial markets and look forward to continually enabling new instruments as we see the client demand,” James Kostulias, head of trading services at Charles Schwab, said in a statement.
The move marks a notable reversal for CEO Rick Wurster, who had been openly skeptical of the category. Wurster drew a distinction between financial event contracts and those pegged to sports or entertainment, warning that the latter risked eroding the boundary between investing and gambling; as recently as December, he said that prediction markets ranked low on Schwab’s priorities. At the same time, he left the door open, acknowledging that competitive pressure from rivals could ultimately force the firm’s hand.
Schwab’s move follows rival brokerages into the space. Both Robinhood and Interactive Brokers have already introduced event contracts to their customers, according to Reuters. Schwab has also recently been expanding into other asset classes: the brokerage launched direct bitcoin and ether trading for customers earlier this year through a new service called Schwab Crypto.
