Cboe Exchange launches a prediction market! When you’re also betting on events, what’s the difference from Polymarket?

The US Cboe exchange launches a new prediction market brand, initially using binary options to predict indexes, officially entering Interactive Brokers, and will expand to Charles Schwab in the future.

Cboe launches prediction market products, targeting financial event trading

The US derivatives exchange Cboe Global Markets officially launches a new prediction market brand 'Cboe Predicts', with initial products based on the Mini S&P 500 Index (XSP), allowing investors to use binary options to predict whether the index will fall within a specified range, officially entering the rapidly growing prediction market in recent years.

The new product has already gone live on Interactive Brokers, and in the coming months, it will also be available for trading through Charles Schwab, with further expansion to more retail brokers in the future. As Cboe joins the competition, the prediction market, which was originally driven by platforms like Kalshi and Polymarket, is beginning to attract more traditional financial institutions.

Binary options enter the market, focusing on compliant trading

Cboe's new product, while similarly offering 'yes or no' prediction trading, uses a binary options structure regulated by US securities laws, rather than event contracts or blockchain prediction markets.

Traders can establish positions based on whether the Mini S&P 500 Index is above a specific price. If the prediction is correct, the contract will pay a fixed return at expiration; if it fails, no payout is received. Cboe also introduces a 'Plus Zone' mechanism, where traders can still receive partial returns when the final price is close to the predicted range, reducing the all-or-nothing settlement of traditional binary options.

All trades are centrally cleared by the Options Clearing Corporation (OCC) and operate under the current securities market regulatory system.

Charles Schwab joins, prediction market competition heats up

In recent years, the prediction market has grown rapidly, with trading targets already covering presidential elections, economic data, sports events, and corporate events, attracting a large number of investors. The rapid development of Kalshi and the decentralized platform Polymarket has also prompted more traditional financial institutions to begin deploying related products.

Charles Schwab has been relatively conservative regarding event contract trading in the past, but now it has chosen to cooperate with Cboe to launch new products, reflecting the continuous increase in market demand and showing that major brokerages are beginning to view prediction markets as a new trading business.

Currently, Cboe's products focus on the financial market, with the initial products only covering the S&P 500 Index. In contrast, Polymarket offers a wider variety of trading targets such as politics, sports, entertainment, and international events, and there are still significant differences in product positioning between the two.

Traditional finance and blockchain platforms compete head-on

Cboe's entry into the prediction market is seen as an important signal that prediction trading is gradually gaining attention from the mainstream financial system. After large exchanges and brokerages join, market competition has also begun to expand from startup platforms to traditional financial institutions.

Regulated platforms have mature trading systems, centralized clearing mechanisms, and existing customer bases, which are attractive to investors who value compliance; blockchain prediction platforms offer 24/7 trading, global market participation, and a wider variety of event products, each with its own advantages.

As more financial institutions enter the prediction market, future competition is expected to focus on product design, liquidity, trading costs, regulatory frameworks, and how different platforms can attract more traders to participate.