Charles Schwab is joining forces with Cboe Global Markets to bring a new type of investment product to its customers — all-or-nothing options contracts that let investors make simple yes-or-no bets on the performance of the S&P 500, according to a Wall Street Journal report published Friday, citing sources with knowledge of the situation.
These so-called binary options will either pay out a fixed cash amount or nothing at all, depending on whether the index hits the predicted level. Schwab plans to make these contracts available to its customers sometime in the coming months, the Journal reported.
Schwab did not respond to a request for comment. However, a source familiar with the arrangement confirmed that Cboe is indeed working with Schwab to bring these products to market, though no additional details were provided.
The broader prediction market space has exploded in popularity since the 2024 U.S. presidential election, growing into a recognized asset class where investors can wager on everything from Federal Reserve interest rate decisions to the outcomes of sports championships. Other trading platforms, including Robinhood and Interactive Brokers, have already launched similar event-based contracts in recent months.
Beyond the binary options, the Wall Street Journal also reported that Schwab is rolling out a separate options feature through Cboe that would allow traders to collect a partial payout even if they don’t get the closing price exactly right — rewarding investors who come close to the mark.
