Charles Schwab is teaming up with Cboe Global Markets to let customers trade binary-style options contracts tied to the S&P 500, according to people familiar with the matter. The contracts allow investors to bet on whether the index will hit a specific level — think a simple yes-or-no wager rather than a traditional options spread.
What the contracts look like
Binary options are all-or-nothing: if the S&P 500 closes at or above a chosen strike price by expiration, the buyer gets a fixed payout. If it doesn't, they lose the premium. The products are common in forex and commodity markets but have been rare on major U.S. stock indexes. Cboe, which runs the options exchange, will handle the clearing and listing; Schwab will offer them to its retail and advisory clients.
The Wall Street Journal first reported the partnership. Neither company has publicly confirmed the timeline or the specific contract terms, but the move signals a deliberate push into what are essentially prediction markets — just wrapped in a regulated exchange structure.
Why Schwab is betting on binary
Schwab has been watching the rise of retail speculation and event-driven trading. Platforms like Kalshi and Polymarket have drawn millions of users who want to bet on everything from election outcomes to interest-rate decisions. Regulators, however, have raised concerns about unlicensed prediction platforms. By partnering with an established exchange operator, Schwab can offer a similar gambling-like payoff within the existing options framework — the same one used for SPX options and VIX futures.
“They’re moving into prediction markets but only on its own terms,” the Journal quoted one person familiar with the firm’s thinking. Schwab wants the liquidity and settlement infrastructure of a traditional exchange, not the Wild West of unregulated event contracts.
What’s next for the product
Binary options on the S&P 500 would need approval from the Securities and Exchange Commission before going live. The timeline is unclear. Schwab would likely start with a pilot program for its largest traders, then roll out more broadly. Cboe already lists binary options on volatility indexes, so the technical backbone is in place.
The big question is whether retail investors will treat these contracts as hedges or lottery tickets. Schwab has built its brand on low-cost, long-term investing. Offering a product that pays out only when a market level is reached — and expires worthless otherwise — is a departure from that ethos. But the firm clearly sees demand for it.
For now, both companies are staying quiet about the launch date. The contracts could appear on the Cboe listing as early as the first half of the year, though regulatory review could push that back.
