Key insights
- Cboe's launch of prediction markets, including binary options on the Mini-S&P 500, signals a growing demand for outcome-based trading, building on the success of 0DTE options. This move, alongside Meta's reported interest in a similar platform, highlights a trend towards speculative, short-term trading products. While potentially increasing market participation and volatility, it could also draw retail interest away from traditional asset classes, suggesting a slightly bullish but cautious outlook
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Global markets operator Cboe has launched its first predictions markets product, the latest financial-markets company working to capitalize on consumer demand in the fast-growing sector.
The offering includes binary option contracts based on the Mini-S&P 500 Index, the company said in a press release on Tuesday.
Prediction markets, which allows users to speculate on various real-world events such as sports and even political outcomes, have been rising in popularity among investors. The combined monthly global trading volume on Kalshi and Polymarket has risen to about $24 billion in April from less than $5 billion in September last year, according to data compiled by the Pew Research Center.
Cboe’s contracts are available on Interactive Brokers and will roll out at Charles Schwab over the coming months, the company said. Additional retail brokerage platforms will offer access over time, it added.
“We have seen continued customer demand for shorter-dated, outcome-based trading,” said JJ Kinahan, head of retail expansion and alternative investment products at Cboe, in the statement. The firm is looking to build on the fast growth of its zero-day-to-expiry, or 0DTE, options, he said.
Earlier, CNBC reported that Meta Platforms CEO Mark Zuckerberg has directed staff to create a prediction markets platform, citing a person familiar with the company’s plans who asked not to be named. The New York Times was first to report the development, which sent stocks like DraftKings and Robinhood lower, on Tuesday.
Disclosure: CNBC and Kalshi have a commercial relationship that includes customer acquisition and a minority investment.