Charles Schwab has made a move into the prediction market arena by teaming up with Cboe Global Markets. The partnership will introduce new contracts centered on the S&P 500 index. According to a Wall Street Journal report, the brokerage giant is working with Cboe to create all-or-nothing options contracts. These allow investors to bet on where the benchmark US stock index will close.
Schwab’s product will be based on options, setting it apart from platforms like Kalshi and Polymarket that use futures-based event contracts. The launch is expected in the coming months for Schwab customers. This development reflects a broader trend where traditional financial firms are embracing event-driven trading. Companies like CME Group and Interactive Brokers have already ventured into prediction-style products.
Initial offerings will target measurable financial outcomes, such as the S&P 500’s performance. Discussions with Cboe also include potential contracts tied to other indices. Schwab plans to introduce an options feature known as the ‘plus zone,’ which offers partial payouts for near-accurate predictions. This mechanism ensures traders receive some compensation even if their forecast isn’t exact.
Institutional interest in prediction markets is surging. Kalshi recently reported an 800% increase in institutional trading volume over six months. Meanwhile, data from DefiLlama shows Polymarket earned roughly $1.5 million in fees over the past day and $10 million over the last week. These numbers highlight the strong activity on crypto-native prediction platforms.
Schwab’s expansion into prediction markets coincides with its growing footprint in digital assets. The firm earlier announced plans to offer crypto trading services to financial advisors by 2027. This follows the rollout of Schwab Crypto, which provides retail clients direct access to Bitcoin and Ethereum. Together, these initiatives position Schwab as a key player in both prediction markets and cryptocurrency services, competing for a larger share of retail and advisor activity.