Nasdaq enters prediction market: Wall Street bets on technology indices with "Yes or No"

Original | Odaily Planet Daily (@OdailyChina)

Author | Asher (@Asher_0210)

Last night, Nasdaq filed a rule change proposal with the U.S. Securities and Exchange Commission (SEC) to introduce an option contract that allows investors to make a “yes or no” judgment on major stock indices.

According to the document, Nasdaq plans to list “binary options,” also known as “result-based options,” on its flagship products—the Nasdaq 100 Index and Nasdaq 100 Micro Index. If approved, this will be Nasdaq’s first official launch of a product with predictive market features.

This move indicates that traditional securities exchanges are actively entering the rapidly growing prediction market sector.

What are binary options?

The proposed contracts will be priced between 1 cent and 1 dollar, with the price directly reflecting the market’s perceived probability of a certain outcome.

For example, if a contract revolves around “Will the Nasdaq 100 Index meet a certain condition at a specific time,” then:

• If the market believes there is an 80% chance of the outcome, the price might be close to $0.80;
• If the condition is met at expiration, the contract settles at $1;
• If not, the contract’s value drops to zero.

Traditional options involve betting on “how much will it rise or fall,” but binary options focus on “whether it will happen.” No complex parameters, no interval calculations—just the outcome itself. This all-or-nothing settlement makes trading more like making a clear prediction about the future.

Because of this, such products are more aligned with prediction market logic in form.

Why choose the Nasdaq 100?

Nasdaq is not selecting an ordinary index but one of the most sensitive assets to market sentiment. The Nasdaq 100 has long been regarded as a core indicator of the U.S. tech sector, with its components concentrated in giants like Apple, Nvidia, Microsoft, Amazon, and Meta. These companies almost every quarter become market focal points—earnings reports, regulatory news, or policy statements can quickly influence the index’s movement.

The high concentration of components means the Nasdaq 100’s movements often revolve around a single focus. Sometimes the market bets on AI expectations, then shifts to interest rate paths or policy changes. During earnings or policy-heavy periods, the index tends to react quickly and collectively, rather than oscillating over a long period.

Additionally, Nasdaq 100 has a mature derivatives trading infrastructure, with ample liquidity and a well-developed pricing system. Launching new structured products on this underlying is risk-controlled and more likely to be accepted by the market.

Two ways traditional exchanges are entering the prediction market

Nasdaq is not the first traditional exchange to show interest in prediction markets. In October 2025, Intercontinental Exchange (ICE), the parent company of the New York Stock Exchange, announced a strategic investment of about $2 billion in Polymarket, holding roughly 20% of the company, with a valuation reaching around $8 billion at one point.

ICE’s approach is not to launch its own prediction products but to enter the space through capital investment and data partnerships. Its core goal is to obtain real-time probability data from prediction markets and incorporate it into institutional services. For ICE, prediction markets serve as a supplementary sentiment indicator and data asset.

In contrast, Nasdaq’s approach is more direct. It plans to embed the binary structure into its core index products, extending within its existing trading framework. Compared to investing in external prediction platforms, this method integrates prediction-based trading into standardized securities, moving beyond external data sources.

The difference in strategies reflects how traditional exchanges assess new trading structures.

Prediction markets being integrated into traditional exchange product systems

Whether the SEC ultimately approves this proposal or not, Nasdaq’s submission of a rule change request sends a clear signal—predictive trading is no longer just an experiment on crypto platforms or niche markets but is beginning to be incorporated into the product systems of mainstream exchanges.

For a long time, mainstream derivatives have focused on price volatility, with investors assessing price swings and timeframes through various structures. Binary options simplify the question to whether a result occurs, shifting the trading focus from magnitude to the outcome itself.

Once the Nasdaq 100 Index is incorporated into this type of contract structure, the trading logic becomes more straightforward. The market’s concern is no longer about the size of the rise or fall but whether a specific result will be realized. The price reflects not just volatility but the consensus on the probability of that outcome.

For Nasdaq, this is an extension of its product line. For prediction markets, it marks the beginning of formal acceptance within the mainstream system. If this product is implemented, it could serve as a bridge between traditional derivatives and event-based trading.