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Cboe Global Markets, Inc. (Cboe: CBOE), the world's leading derivatives and securities exchange network, announced their intention to enter the lucrative prediction market space, and with a twist. Cboe plans to offer markets that extend beyond the simple YES or NO offered at both Kalshi and Polymarket.
Today's event contracts only offer two binary outcomes: "yes or no," "all or nothing", a press release from the company announced.
Cboe's prediction markets will introduce a third dimension – a new middle ground – enabling customers to engage with defined risk, while gaining the opportunity to earn a partial payout when they are directionally correct, even if the result is not precisely on their target.
Under Cboe's new proprietary and patent-pending framework, customers could participate in contracts that deliver three potential payout outcomes: a $0 payout, a partial payout within a defined "payout zone," or a full $100 payout. Cboe plans to offer this framework first through a Mini S&P 500 Index prediction market contract. This will allow traders to express their outlook on the U.S. equity market – such as where the S&P 500 Index (SPX) may close at the end of a trading day – by taking a traditional "yes" or "no" position, or by leveraging the added "payout zone" position to reduce potential losses and potentially benefit from being directionally correct without needing to make a perfect call.
"Our new prediction market contracts essentially take the mechanics of a traditional vertical spread – one of the most popular options strategies – and package them in an intuitive, accessible format for a broader audience," said JJ Kinahan, Head of Retail Expansion and Alternative Investment Products at Cboe. "These contracts will offer greater flexibility and clearly defined risk compared to traditional event contracts, along with the opportunity to earn a partial return when traders are directionally correct. Real-world opinions aren't always binary, and investors shouldn't be confined to a yes-or-no framework. Our more nuanced model is designed to reward informed perspectives – giving retail traders credit even when they are mostly right – and introduce an entirely new way for people to engage with outcome-based trading that simply doesn't exist today."
The company plans to launch its new platform some time in the 2nd quarter of this year.
In 2025, vertical spread trades averaged nearly 580,000 contracts per day in 0DTE SPX options, underscoring rising retail demand for strategies that could benefit from directional market moves while limiting downside risk.
"There is clear customer demand to trade around market events tied to the S&P 500 Index, and our new SPX prediction market contracts will just make it easier for even more people to participate in that activity," said Rob Hocking, Global Head of Derivatives at Cboe. "What sets our products apart from other SPX event contracts is that ours are built directly on top of the SPX options ecosystem – one of the deepest and most liquid options markets in the world. This means that pricing is grounded in real market activity, and customers can benefit from the transparency, liquidity and safeguards of our regulated securities exchange. As the home of SPX options, Cboe is uniquely positioned to bring this product to market in a way that reflects the strength and integrity of the broader SPX ecosystem."
"We are proud to support continued innovation within the S&P 500 ecosystem. Cboe's planned prediction market contracts help new investors benefit from the market leading integrity, governance, and reliability of the S&P 500, within a simple and easy-to-access contract structure," said Cameron Drinkwater, Chief Product & Operations Officer at S&P Dow Jones Indices.
"As the leader in retail options trading and a close partner of Cboe, we are pleased to see Cboe continue to innovate in the financial markets and look forward to continually enabling new instruments as we see the client demand," said James Kostulias, Head of Trading Services at Charles Schwab.
Cboe, which launched the world's first listed options exchange in 1973, may extend its prediction market framework to offer more contracts on additional indices or stocks in the future.
Cboe has pioneered landmark products, including the introduction of S&P 500® index options and the creation of the VIX® Index, the world's leading gauge of market volatility, reshaping how investors manage risk and access opportunity. Today, Cboe operates derivatives, equities, and FX markets, providing trading, clearing, and investment solutions for customers worldwide.
