Cboe Global Markets has launched its new prediction markets platform, Cboe Predicts, as the company enters the prediction trading market with a new suite of securities-based products.
The new offering includes binary option contracts tied to the Mini-S&P 500 Index, trading under the symbols XSPBW and XSPBX, which are already available through Interactive Brokers. Access through Charles Schwab is expected in the coming months. Cboe also said additional brokerage firms are likely to add support over time, broadening access to the new contracts.
New Prediction Markets Suite
According to the official press release, the new products allow traders to make predictions on where the Mini-S&P 500 Index, or XSP, will settle at expiration. Traders can take a “yes” position if they believe the index will close at or above a specified level or choose a “no” position if they expect it to finish below that level. The XSP index tracks the performance of the S&P 500 Index but is scaled to one-tenth the size of the larger SPX contract, which makes it a smaller, more retail-friendly alternative.
The new products also expand Cboe’s existing S&P 500 offerings. The company said it plans to add XSP vertical spreads in the future through its Quoted Spread Book system, which is designed to make more complex options strategies easier to understand. The framework aims to help traders who are familiar with simple yes-or-no contracts gradually learn more advanced trading strategies while keeping risks defined.
The products are cleared through the Options Clearing Corporation, which manages the settlement process. According to the company, the contracts will also operate under the same regulatory rules that apply to other options listed in the United States.
Commenting on the latest development, James Kostulias, Head of Trading Services, Charles Schwab, said,
“We support approaches that bring transparency, defined risk, and investor education to financial-related prediction markets. We plan to offer clients access to these binary options contracts in the coming months, building on our existing platform and demand from active traders.”
Earlier Skepticism
The latest development comes months after Charles Schwab CEO Rick Wurster expressed skepticism about prediction markets. In December, Wurster told The Wall Street Journal that event contracts tied to sports or entertainment could blur the line between investing and gambling, while adding that prediction markets were “not high on our list at the moment.”
Charles Schwab has also been expanding into new asset classes in recent months. Earlier this year, the brokerage rolled out Schwab Crypto, allowing retail clients in most US states to directly trade Bitcoin and Ethereum alongside traditional investments through the same platform.
Source: CryptoPotato
