WSJ: Cboe Plans to Restart Binary Options Trading to Compete Directly with Prediction Markets

BlockBeats News, February 2 — According to The Wall Street Journal on Monday, leading derivatives exchange Cboe Global Markets is exploring the relaunch of binary options trading for retail investors, aiming to directly compete with the rapidly growing prediction market sector.

The report states that the proposed contracts will operate as a fixed-income derivative: either paying a preset amount or expiring worthless, similar to the common payout structure on prediction platforms. For example, a binary call option linked to the S&P 500 index at 7,000 points would pay the preset return if the index closes at or above that level at expiration; if below, the return is zero.

Traders on prediction platforms use a similar "yes/no" structure, with contracts typically trading between $0.01 and $0.99, and settling at $1 when the prediction is correct.

Cboe first listed binary options linked to major financial indices in 2008, but they were later delisted due to lack of appeal in a market dominated by institutional professionals at the time. Such products have also faced regulatory scrutiny. The U.S. Securities and Exchange Commission (SEC) warned of potential investor losses in 2013, and U.S. regulators have recorded multiple fraud complaints against unregulated binary options websites. This time, the exchange plans to focus on compliance and product design for the product launch.