Charles Schwab plans S&P 500 prediction markets with Cboe

Charles Schwab is working with Cboe Global Markets to introduce contracts that would allow customers to make yes or no predictions on the performance of the S&P 500, according to a Wall Street Journal report.

The brokerage plans to make the products available in the coming months, marking its first move into the growing prediction market sector.

The contracts will use a binary options structure. They will pay a fixed cash amount if the S&P 500 closes above or below a predetermined level and nothing if the condition is not met.

The products differ from the futures contracts offered by traditional prediction market platforms but provide a similar fixed outcome structure.

Schwab is also preparing a related Cboe product with a feature known as the plus zone, which offers a partial payout when a trader is directionally correct but the index does not finish at the exact target.

Cboe introduced the framework earlier this year as an alternative to standard all or nothing contracts. Its initial products are tied to the Mini S&P 500 Index and settle in cash.

The move places Schwab alongside brokerages including Robinhood and Interactive Brokers, which have already expanded into event based financial contracts.

Schwab chief executive Rick Wurster previously said the company was more interested in prediction products tied to financial markets than contracts based on sports, politics, or entertainment.

The planned offering will remain focused on market outcomes, allowing Schwab to enter the sector through regulated options products rather than broader event wagering.