Cboe Global Markets is making a significant move by launching Cboe Predicts, a unique suite of event contracts focused on the S&P 500. Unlike traditional prediction markets that primarily operate on a yes/no basis, Cboe Predicts introduces an innovative three-outcome payout structure designed to offer more flexibility and potential reward.
#What is the three-outcome payout model?
This new model is structured around three possible scenarios. Traders can earn a full payout of $100 if they accurately predict the outcome. For those who correctly anticipate the direction but elect the wrong target, there’s a partial payout available within the “Plus Zone.” Lastly, a complete miss results in a $0 payout. The contracts utilize daily closing levels of the S&P 500 and are based on Mini-SPX (XSP) contracts as their underlying asset.
#How does the partnership with Charles Schwab enhance retail trading?
In an effort to make these contracts widely available, Cboe has partnered with Charles Schwab, ensuring that these products will trade on the Cboe Options Exchange, with centralized clearing facilitated by the Options Clearing Corporation. This collaboration aims to onboard retail investors by providing educational resources tailored to them. The rollout of these products is anticipated to begin in the second quarter of 2026, with June targeted as the launch month.
#How does Cboe Predicts compare to other prediction markets?
Cboe is strategically avoiding involvement in the prediction markets related to sports and political events, keeping its focus strictly on financial benchmarks like the S&P 500. By leveraging the SPX options complex, one of the most traded options globally, Cboe doesn't have to generate liquidity from the ground up.
#What implications does this have for investors?
The entry of Cboe into this segment of the market elevates the level of competition, particularly against Kalshi, which has established itself as a leading regulated prediction market in the U.S. However, Kalshi lacks Cboe's robust institutional network and established options infrastructure, while Polymarket primarily caters to a crypto-centric audience. Cboe’s products, by adhering to OCC standards and benefiting from Schwab’s distribution capabilities, operate under a regulatory framework similar to that of traditional options, which can offer a level of security for investors.
As Cboe Predicts gears up for its launch, investors should keep an eye on how these innovative contracts may change the landscape of trading in predictions based on financial benchmarks.