Cboe Launches Prediction Markets With Yes-or-No S&P 500 Contracts

TLDR

• Cboe launched Cboe Predicts with XSP binary options.
• The contracts are tied to the Mini-S&P 500 Index.
• XSPBW and XSPBX are now available through Interactive Brokers.
• Each contract pays either $100 or $0 at settlement.
• Charles Schwab plans to add access to the contracts in coming months.

Cboe Global Markets has launched Cboe Predicts, a new suite of prediction markets-style binary options tied to the Mini-S&P 500 Index, giving traders a regulated way to take yes-or-no positions on equity index outcomes.

The first contracts, listed under the symbols XSPBW and XSPBX, are based on XSP, which tracks the S&P 500 Index at one-tenth the size of standard SPX contracts. The smaller contract size is designed to make S&P 500-linked event trading more accessible through retail brokerage platforms.

The contracts are now available through Interactive Brokers, while Charles Schwab plans to offer access in the coming months. Cboe said additional retail brokerage platforms are expected to support the products over time.

Cboe Predicts Brings Binary Options to XSP

Cboe’s binary options allow traders to express a view on where XSP will settle. A “yes” position pays $100 if the index settles at or above a specified level and $0 if it does not, while a “no” position pays $100 if the index settles below that level and $0 otherwise.

The fixed payout structure makes the contracts resemble prediction markets, where users take positions on a defined outcome. However, Cboe said the products are securities options and will trade within the same regulatory framework as U.S.-listed options.

Cboe said the launch follows strong demand for shorter-dated and outcome-based trading after the growth of SPX zero-day-to-expiration options. JJ Kinahan, Cboe’s head of retail expansion and alternative investment products, said the new contracts extend Cboe’s S&P 500 options suite with simple event-based payout structures.

The company has also introduced educational resources through The Options Institute and a dedicated prediction markets hub. Those materials are intended to explain binary options, decision-making and core options concepts to traders using the new products.

OCC Clearing Supports Regulated Market Structure

The new XSP binary options are centrally cleared through the Options Clearing Corporation. OCC will manage settlement and counterparty risk, placing the products inside established U.S. listed options infrastructure.

Mike Hansen, OCC’s chief clearing and settlement services officer, said the clearinghouse will apply the same risk management and settlement systems used for other cleared options products. The centralized clearing model gives the contracts a structure different from many crypto-native or direct prediction markets platforms.

Interactive Brokers CEO Milan Galik said investors are seeking products that allow them to express specific views on future events and market outcomes. Charles Schwab’s head of trading services, James Kostulias, said the firm supports prediction-market approaches that include transparency, defined risk and investor education.

Cboe also plans to add XSP vertical spreads through its Quoted Spread Book framework in a future release. That system is designed to package common options strategies into a more standardized format while keeping risk defined for traders.

Prediction Markets Competition Expands Beyond Crypto

Cboe’s launch comes as prediction markets gain broader attention across finance and technology. Platforms such as Polymarket and Kalshi have helped popularize event-based trading, while regulated exchanges and large technology firms are now exploring similar user demand.

Meta is reportedly developing a standalone prediction markets app called Arena, according to The New York Times. The product is said to be separate from Facebook, Instagram, WhatsApp and Messenger, with an initial points-based system rather than real-money wagering.

Meta previously launched a prediction app called Forecast in 2020 before closing it in 2022. The reported Arena project suggests the company is again studying prediction markets as a user-engagement format.

For Cboe, the strategy centers on regulated securities markets rather than social prediction products. The exchange said Cboe Predicts will rely on established market surveillance, broker access and central clearing through OCC.

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