Charles Schwab working with Cboe to enter prediction market, WSJ reports

Charles Schwab is partnering with Cboe Global Markets to introduce binary options contracts allowing customers to place yes-or-no wagers on the S&P 500's performance.

Charles Schwab is working with Cboe ​Global Markets to introduce ​all-or-nothing options contracts that ‌allow customers ​to place yes-or-no wagers on the performance of the S&P 500, the Wall ‌Street Journal reported on Friday, citing people familiar with the matter. Schwab will make binary options, which pay a set cash settlement or nothing ‌at all depending on performance of index, available to customers in ‌the coming months, the report said.

Charles Schwab did not immediately respond to a request for comment. A person familiar with the matter confirmed that ⁠Cboe is ​working with Charles ⁠Schwab to offer the products but gave no further details. Prediction markets surged ⁠in popularity during the 2024 U.S. presidential election and have evolved into ​an asset class that lets investors wager on a variety of ⁠events, from monetary policy to sports tournaments. Trading platforms such as Robinhood and Interactive ⁠Brokers ​have rolled out event contracts in recent months.

The Wall Street Journal said Schwab is also rolling out an options offering ⁠with a Cboe feature that allows traders to earn a partial ⁠payout if ⁠they are mostly right, even if the closing price of the index is not exactly what they ‌predicted.