Cboe’s KPI Options Normally Use Company SEC Filings to Settle

Cboe’s binary options on company performance metrics normally use values in earnings-related SEC filings to settle, tying payouts to company disclosures rather than crypto prices.

The European-style contracts are cash-settled. At expiration, the normal payout is $1 if the specified metric meets the contract’s condition and $0 if it does not. If a KPI is unavailable, clearing procedures may produce a payout between $0 and $1. Cash normally settles on the business day after expiration; if the settlement value is determined later, delivery follows on the next business day.

The approved metrics include Coinbase’s total trading volume, transaction revenue, total revenue and subscription and services revenue. Robinhood’s include funded customers and total net revenues. Marathon Digital Holdings, Inc.’s metric is the number of Bitcoin blocks won.

That settlement method makes the contracts different from options tied directly to a crypto asset’s price. The SEC approval covers Cboe’s specified contracts as standardized securities options; similarly linked products with a different structure may fall under Commodity Futures Trading Commission jurisdiction. Earlier coverage of the SEC’s approval of KPI options outlined the securities-options framework.

As of Oct. 21, the contracts remained pre-launch, and no production date had been set. Comments on an amended clearing-agency application for Cboe Clear U.S., LLC are due Oct. 30.