Cboe Starts Trading Binary Options on the Mini-Russell 2000 Index

Cboe Global Markets began trading binary options on the Mini-Russell 2000 Index on Nov. 9, adding a yes-or-no contract tied to U.S. small-cap stocks with same-day and next-day expirations.

Listed under ticker MRTBW, the contracts reference MRUT, an index valued at one-tenth of the Russell 2000. Each contract asks whether MRUT will settle above or below a specified level. A correct result pays $100; an incorrect result pays $0.

For example, a contract with a 280 threshold pays $100 if MRUT’s final settlement is 280 or higher. That example describes an upward threshold. Other contracts can be framed around whether the index settles below a selected level, with the payout determined by that trade’s direction and threshold.

Contracts can expire on the trading day they are listed or on the following trading day. The Options Clearing Corporation centrally clears them.

The launch adds a small-cap index reference to Cboe’s prediction-market lineup, which already includes contracts tied to the S&P 500. MRUT gives those contracts exposure to a mini version of the Russell 2000 rather than the full benchmark.

The Russell 2000 tracks about 2,000 smaller U.S. companies. It is part of the Russell 3000, which covers about 98% of the investable U.S. equity market. The Mini-Russell contract therefore ties its yes-or-no outcome to a segment of the broader U.S. stock market.

Cboe’s traditional Russell 2000 options averaged about 85,000 contracts in daily volume during the first three quarters. That figure reflects trading in the traditional options; the new binary contracts trade under the separate ticker MRTBW. The new contracts use a fixed payout and a shorter expiration schedule, with the final result tied to MRUT’s settlement against the level specified for each trade.