Cboe Could Take On Prediction Markets With New All-or-Nothing Options

Credit: Cboe

Cboe Global Markets is developing a new options-based product offering all-or-none payouts. If completed, this structure will be in direct competition with prediction markets like Kalshi and Polymarket.

Cboe Global Markets plans to introduce options-based trading

Prediction markets could be getting another competitor.

As reported by The Wall Street Journal, Cboe, a Chicago-based venue for options trading, is in early talks with brokerages and market makers as it explores how to implement this new style.

If Cboe finalizes this agreement, the plan will be to use a binary-style payoff of all-or-nothing that would deliver a fixed return.

Think of these as yes-or-no contracts. If the event outcome occurs, then the contract pays out a fixed amount. If the event does not happen, it settles at zero. This is very similar to how prediction markets work, where users bet on the outcomes in sports, politics, entertainment, and more.

Cboe plans to focus on financial markets, and it will be regulated.

Cboe does not plan to move into sports betting. Kalshi and Polymarket offer sports contracts, and they are breaking records doing it.

“I know there’s probably the potential to make money there,” Cboe’s Chief Executive Officer Craig Donohue said. “It’s also fraught with lots of litigation and lots of regulatory risk as well, so that’s for other people. But for Cboe, we’re going to remain focused on things that have financial and economic implications.”

Cboe has tried a similar strategy in the past

This is not the first time that Cboe has implemented binary options.

In 2008, Cboe launched binary call options, which allowed traders to bet on whether indexes would close above a certain level. These options were integrated with the S&P 500 and the Cboe Volatility Index (VIX).

Nearly 20 years ago, these options did not gain any traction, which led to them being delisted.

Cboe does not want to relaunch the same product from 2008. Instead, the company plans to re-explore the concept but make it for the 2026 market.

With this new strategy, Cboe wants to appeal to more consumers and create a concept that’s easier to digest. This all starts with a better user experience.

Can Cboe truly compete with prediction markets?

It’s still too early to tell if Cboe will be a rival to platforms like Kalshi and Polymarket.

Cboe won’t compete in sports betting, so the other prediction markets will have the upper hand. However, Cboe hopes to get into the derivatives market and eventually become one of the top platforms in the space.

Polymarket has offered contracts on the S&P, while Kalshi has ventured into crypto markets. Cboe might be able to close the gap by attracting the people not on those markets.

There is no timeline for Cboe to implement this options-based product. It must finalize how its prediction markets will be regulated. If Cboe succeeds there, then perhaps it could be a platform that is here to stay.

Andrew Foster

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