Charles Schwab is working with Cboe Global Markets to introduce binary 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.
The products, known as binary options, are expected to be made available to Schwab customers in the coming months, according to the report. The contracts provide either a fixed cash payout or no payout at all, depending on whether a specified market outcome occurs.
A person familiar with the matter confirmed to WSJ that Cboe is working with Schwab on the offering but declined to provide additional details.
The planned offering is set to mark Schwab’s entry into the rapidly growing market for event-based and prediction-style contracts, which gained prominence during the 2024 U.S. presidential election and have since expanded to cover a range of outcomes, including monetary policy decisions and sports tournaments.
Several brokerage platforms, including Robinhood and Interactive Brokers, have rolled out event contracts in recent months as investor interest in prediction markets has increased.
The Wall Street Journal also reported that Schwab is preparing to launch an options offering that incorporates a Cboe feature allowing traders to receive a partial payout when their market forecasts are close to the actual outcome, even if they are not exactly correct.
The planned offerings underscore the growing convergence between traditional financial markets and prediction-based trading products, which have attracted both retail investors and regulatory scrutiny as their popularity expands.