- Schwab is preparing to enter prediction markets through a Cboe partnership, launching S&P 500-linked contracts that mark its first step into the sector.
- The product will use binary options-style structures, paying out based on whether the index closes above or below set levels, with predefined risk for traders.
- The firm is keeping its focus on regulated financial outcomes only, while also exploring partial-payout mechanics and possible expansion beyond the S&P 500.
Charles Schwab is moving into prediction markets with a new product linked to the S&P 500, developed in collaboration with Cboe Global Markets. The offering is expected to become available in the coming months and marks the brokerage’s first step into the category.
The contracts will allow traders to make a binary prediction on the closing performance of the benchmark US sharemarket index. If the S&P 500 finishes above or below a specified level, depending on the position selected, the contract will pay a fixed cash amount. Otherwise, it will expire without a payout.
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Keeping Prediction Trading Inside Wall Street Rails
Reports indicate the structure will resemble financial prediction products already available through platforms such as Kalshi and Polymarket, where users take positions on defined market outcomes. However, Schwab is restricting its plans to financial-market events rather than expanding into areas such as politics, sport or entertainment.
The brokerage is also expected to offer contracts incorporating Cboe’s “Plus Zone” feature. This mechanism provides traders with a partial reward when their forecast is close to the final result, even if it does not precisely match the target level.
Schwab chief executive Rick Wurster previously signalled the company’s intentions during an earnings call, saying the firm would likely introduce prediction markets. At the same time, he emphasised a distinction between financial forecasting products and contracts based on non-financial events.
According to reports, Schwab and Cboe have also discussed extending the concept to additional indices and financial benchmarks beyond the S&P 500.
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