Cboe Global Markets is in early discussions to relaunch binary options contracts, positioning the derivatives exchange to compete with the rapidly expanding prediction market sector. The initiative would mark a return to products Cboe previously discontinued in 2008, this time aimed at retail investors and structured within a regulated framework.
The proposed contracts would function as fixed-payout derivatives, delivering a preset return if a specific condition is met at expiration or expiring worthless if it is not. Such “all-or-nothing” structures closely resemble contracts traded on prediction platforms, where participants take yes-or-no positions on outcomes ranging from financial benchmarks to political events.
Regulated Entry Into Event-Driven Trading
Binary options listed by Cboe would be tied strictly to financial variables, such as equity index levels, and would fall under oversight by US regulators including the Securities and Exchange Commission or the Commodity Futures Trading Commission. Cboe executives emphasized that legal and compliance considerations would be central to any product rollout, reflecting lessons learned from earlier attempts and past regulatory scrutiny.
Binary options have a controversial history in the United States. While exchange-listed contracts differ from offshore offerings, regulators previously flagged unregulated platforms for fraud and investor losses. Cboe’s approach aims to distinguish itself by offering transparent pricing, standardized contract terms and centralized clearing.
Company officials see the product as a potential entry point for retail investors seeking simplified exposure to options markets without complex payoff structures. The exchange is also engaging retail brokerages and market makers to assess demand and liquidity conditions before proceeding.
Prediction Markets Gain Institutional Attention
Cboe’s renewed interest comes as prediction markets experience record activity. Kalshi and Polymarket, two leading platforms in the sector, recorded a combined $17 billion in trading volume in January, representing the highest monthly total on record. Both platforms have benefited from rising demand for event-driven exposure across sports, politics and macroeconomic indicators.
Market research firms note that prediction markets are transitioning from niche products into a broader segment attracting institutional capital and infrastructure investment. At the same time, liquidity fragmentation and regulatory uncertainty remain challenges as participation scales.
Traditional financial institutions are increasingly monitoring the space. Coinbase has begun offering event-based contracts through Kalshi, while major banks have publicly acknowledged evaluating prediction markets as regulatory frameworks evolve.
For Cboe, the strategy reflects a broader effort by established exchanges to capture emerging trading behaviors within regulated environments. By offering binary options tied to financial outcomes, the exchange may provide a compliant alternative to crypto-native platforms while preserving institutional standards for market integrity.
The outcome of Cboe’s exploration could influence how prediction-style products are integrated into mainstream financial markets, particularly as retail participation and event-driven trading continue to grow.
