Schwab to join prediction markets race with S&P 500 event-based options: WSJ
Key takeaways
- The feature is expected to roll out to Schwab customers in the coming months, the Journal reported, citing people familiar with the matter.
- The companies have even discussed expanding the lineup beyond the S&P 500 to other market indexes or financial benchmarks, according to the report.
- The launch would make Schwab the latest entrant in a rapidly expanding prediction markets industry.
The feature is expected to roll out to Schwab customers in the coming months, the Journal reported, citing people familiar with the matter.
Unlike traditional prediction market platforms such as Polymarket and Kalshi, which typically offer futures-style contracts tied to the outcome of events, Schwab’s product would function more like a binary option, in which the contract would pay a fixed cash amount or expire worthless depending on whether the S&P 500 closes above or below a specified target price.
Schwab and Cboe are also in talks to offer a similar product tied to a Cboe feature known as the “Plus Zone,” which would allow traders to receive a partial payout when their prediction is close to the final outcome, even if the index does not finish exactly at the target level.