Charles Schwab is getting into the prediction business. The brokerage plans to offer event-based options tied to the S&P 500, letting customers bet directly on index moves rather than just trading stocks or ETFs. The move positions Schwab alongside Coinbase and Robinhood, which have also been expanding into prediction markets.
What event-based options look like
Traditional options give traders the right to buy or sell an asset at a set price by a certain date. Event-based options work differently: they pay out if a specific condition is met — in this case, whether the S&P 500 finishes above or below a certain level by expiration. Schwab's product would allow customers to wager on that outcome, effectively turning index forecasts into tradable contracts.
The company hasn't detailed the contract terms, strike prices, or launch date. But the structure is similar to binary options, though Schwab's product is expected to be exchange-listed and regulated. That distinction matters: binary options have faced scrutiny from regulators in the past, while exchange-traded event contracts have a clearer legal path.
A growing field with new entrants
Schwab isn't alone. Coinbase and Robinhood have both been building out prediction-market offerings. Coinbase launched a futures and derivatives platform last year, and Robinhood recently began offering event contracts tied to Super Bowl outcomes and election results. The broader prediction market space — where users bet on everything from inflation data to Fed rate decisions — has been drawing interest from retail investors hungry for new ways to speculate.
For Schwab, the move is a natural extension of its existing options business. The firm already offers standard equity and index options through its trading platform. Adding event-based contracts on the S&P 500 lets it compete with newer, more aggressive rivals without straying far from its core market.
Why the S&P 500 makes sense
An S&P 500 event contract is a relatively straightforward product. The index is the most-watched benchmark in U.S. markets, and retail traders regularly guess its direction. Schwab's offering would give them a way to put money on that guess with a defined risk — the premium paid for the option — and a fixed payout if they're right.
The timing also aligns with broader trends. The SEC has approved exchange-listed event contracts in recent years, and the Commodity Futures Trading Commission has signaled openness to certain types of prediction products. Regulators are still working out the boundaries, but the door is open enough for major brokers to step through.
Schwab hasn't said whether the offering will be available to all customers or limited to certain account types. The company also hasn't disclosed fee structures or minimum contract sizes. Those details will matter for retail traders trying to decide whether the product is worth the risk.
For now, the biggest question is when. Schwab hasn't given a timeline, and it's unclear whether the product needs additional regulatory sign-off. Coinbase and Robinhood have already moved ahead; Schwab's entry could accelerate the race to capture the prediction market crowd.
