Schwab to Launch S&P 500 Prediction-Style Options in New Push Into Prediction Markets

Charles Schwab is preparing to enter the growing prediction markets sector through a partnership with Cboe Global Markets, according to a Wall Street Journal report. The brokerage firm is reportedly developing a new type of options contract that will allow investors to make simple yes-or-no predictions on the future performance of the S&P 500 index.

The new financial product, expected to be available to Schwab customers in the coming months, differs from traditional prediction market platforms such as Polymarket and Kalshi. While those platforms generally offer event-based futures contracts, Schwab’s offering would operate as a binary options-style contract. Traders would receive a fixed cash payout if the S&P 500 closes above or below a predetermined target level. If the prediction is incorrect, the contract would expire without value.

Schwab and Cboe are also reportedly exploring a related product linked to Cboe’s “Plus Zone” feature. This structure could provide traders with a partial payout when their forecast comes close to the final market outcome, even if the exact target is not reached. The feature is designed to offer more flexibility and potentially reduce the all-or-nothing nature of standard binary contracts.

The companies are also discussing the possibility of expanding these prediction-style contracts beyond the S&P 500 to include other stock market indexes and financial benchmarks. However, Schwab is expected to focus exclusively on financial market events with objective and verifiable outcomes, avoiding contracts tied to political elections, sports events, or other non-financial topics.

The move highlights the rapid growth of the prediction markets industry. Platforms such as Kalshi and Polymarket have attracted increasing interest from traders looking to speculate on elections, economic indicators, and other future events. Major trading and crypto firms are also entering the space, with Coinbase and Robinhood recently introducing their own prediction market products.

Schwab’s planned launch signals that mainstream financial institutions are increasingly embracing prediction-based trading products as demand for alternative investment opportunities continues to grow.