Schwab Enters Prediction Markets with New S&P 500 Options: WSJ

The upcoming offering will allow clients to wager on index fluctuations as Coinbase and Robinhood grow in this area.

— Charles Schwab is collaborating with Cboe Global Markets to introduce innovative yes-or-no options contracts for the S&P 500, signifying the brokerage’s initial foray into prediction markets.

— This upcoming product will operate similarly to a binary option, providing a set payout or nothing based on whether the index finishes above or below a predetermined threshold, with availability for Schwab customers anticipated in the near future.

— Schwab and Cboe are considering additional contracts utilizing Cboe’s Plus Zone feature and may extend their offerings to other financial indices, steering clear of markets associated with politics, sports, or other non-financial occurrences.

Charles Schwab is teaming up with Cboe Global Markets to introduce a new category of options contract that will enable clients to place yes-or-no bets on the S&P 500’s performance, marking the brokerage’s inaugural entry into prediction markets, as reported by the Wall Street Journal.

The new feature is expected to be available to Schwab clients within the next few months, according to the Journal, which cited sources familiar with the developments.

In contrast to traditional prediction market platforms like Polymarket and Kalshi, which generally provide futures-style contracts linked to event outcomes, Schwab’s offering will resemble a binary option, where the contract will either yield a fixed cash amount or expire with no value, contingent on whether the S&P 500 closes above or below a designated target price.

Additionally, Schwab and Cboe are in discussions to provide a comparable product associated with a Cboe feature known as the «Plus Zone,» which would enable traders to receive a partial payout when their prediction is close to the final result, even if the index does not finish precisely at the target level.

The companies have also considered broadening their product range beyond the S&P 500 to include other market indices or financial benchmarks, according to the report. However, Schwab intends to concentrate on events with objectively verifiable outcomes in financial markets rather than those related to politics, sports, or other real-life events.

The introduction of this product will position Schwab as the latest player in the rapidly growing prediction markets sector. Platforms such as Kalshi and Polymarket have garnered increasing interest from traders eager to speculate on a wide range of topics, from elections to economic data releases.

Crypto and retail trading companies have also ventured into this domain. Recently, Coinbase (COIN) and Robinhood (HOOD) have both launched prediction market products.

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In May, combined exchange volumes decreased by 3.45% to $4.41 trillion; the lowest since September 2024. RWA perpetual futures volumes increased by 10.4% against this trend, achieving a new all-time high.

In May, combined exchange volumes decreased by 3.45% to $4.41 trillion; the lowest since September 2024. RWA perpetual futures volumes increased by 10.4% against this trend, achieving a new all-time high.

Why it matters:

In May, combined exchange volumes decreased by 3.45% to $4.41 trillion; the lowest since September 2024. RWA perpetual futures volumes increased by 10.4% against this trend, achieving a new all-time high.