Charles Schwab is working with Cboe Global Markets to introduce contracts that would allow customers to make yes or no predictions on the performance of the S&P 500, according to a Wall Street Journal report.
The brokerage plans to make the products available in the coming months, marking its first move into the growing prediction market sector.
The contracts will use a binary options structure. They will pay a fixed cash amount if the S&P 500 closes above or below a predetermined level and nothing if the condition is not met.
The products differ from the futures contracts offered by traditional prediction market platforms but provide a similar fixed outcome structure.
Schwab is also preparing a related Cboe product with a feature known as the plus zone, which offers a partial payout when a trader is directionally correct but the index does not finish at the exact target.
