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Schwab teams with Cboe to launch S&P 500 prediction-style options
Charles Schwab is expanding into prediction-style trading by partnering with Cboe Global Markets to roll out S&P 500–linked options contracts. The offering, expected to become available to Schwab clients in the coming months, will let traders place directional bets on where the benchmark U.S. equity index will close — using an options structure rather than the futures-based contracts popularized by platforms like Kalshi and Polymarket.
How Schwab’s product differs from crypto-native and futures markets
Unlike Kalshi and Polymarket, which largely use event futures and have been prominent in the crypto and DeFi prediction sphere, Schwab’s new contracts are built on all-or-nothing options mechanics. Sources familiar with the discussions told the Wall Street Journal that Schwab and Cboe are preparing binary-style options that pay out if the S&P 500 finishes at or above a stated level.
Schwab is also exploring a variation that employs Cboe’s “plus zone” feature: an option that provides partial payouts when a forecast comes close to the index’s closing level, reducing the all-or-nothing downside for traders who almost nail the outcome. This hybrid payout model may attract retail traders and registered investment advisors seeking event-driven strategies with more nuanced payoff profiles.
Industry context: competition heats up for event-driven trading
Prediction markets have broadened beyond politics and sports into macro and market events, and incumbent brokerages see an opportunity. Major financial incumbents such as CME Group and Interactive Brokers have already launched or expanded into prediction-style products; Schwab’s move brings a leading retail brokerage into direct competition with both legacy venues and crypto-native markets.
Institutional demand for event-driven contracts has surged. Kalshi reported a dramatic rise in institutional flow, while on-chain metrics highlight continued volume on decentralized platforms: Polymarket generated roughly $1.5 million in fees over a single 24-hour period and about $10 million across seven days, according to DefiLlama. These figures underline persistent interest from both retail and institutional traders in prediction markets and market-linked contracts.
Focus on measurable financial outcomes
Schwab’s initial rollout will emphasize measurable stock market outcomes — closing levels and index thresholds — rather than the diverse range of political or entertainment events available elsewhere. Conversations between Schwab and Cboe have reportedly considered expanding to other indexes, signaling a potential roadmap that could include products tied to volatility, sector benchmarks, or international indices.
Crypto expansion runs in parallel with new trading products
The timing of Schwab’s prediction-market initiative coincides with an ongoing expansion of its cryptocurrency services. Earlier in June, Schwab announced plans to broaden direct crypto offerings for both retail customers and registered financial advisors. The firm is targeting 2027 to deliver full spot cryptocurrency trading, transfers, and custody for advisors — adding institutional-grade crypto custody and account servicing to its wealth management platform.
For retail clients, Schwab already launched Schwab Crypto, enabling direct spot trading in Bitcoin and Ethereum for selected U.S. customers as part of a phased rollout. Bringing crypto spot trading and custody into advisor workflows would make Schwab a more comprehensive provider for advisors managing digital-asset allocations for clients.
What this means for traders and advisors
For retail traders, Schwab’s S&P 500 options could offer a regulated, familiar interface for event-driven strategies — with the added benefit of Schwab’s clearing, compliance, and advisor integration. For advisors, the combination of prediction-style contracts and forthcoming crypto custody could expand portfolio construction tools, from hedging market-event risk to allocating to spot Bitcoin and Ethereum within managed accounts.
As competition intensifies between traditional brokerages, managed-asset platforms, and crypto-native exchanges, Schwab’s dual push into prediction-style options and expanded crypto services signals the mainstreaming of event-driven trading and digital assets in regulated brokerage environments.
Investors should evaluate risks carefully: event-linked options and binary-style contracts can be highly speculative and may require clear risk management and suitability checks, especially when integrated into advisory accounts.
Source: crypto
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