The Cboe exchange is reviewing plans to reintroduce binary options for retail traders. This follows surging interest in event-driven trading on regulated prediction markets. A previous 2008 launch failed due to weak retail adoption. The new product would offer fixed payouts on market outcomes, similar to contracts on platforms like Kalshi and Polymarket, which saw record combined volumes exceeding $17 billion in January.
Cboe Global Markets will consider bringing back binary options on Monday. This review follows increased activity in event-driven options trading and growth on regulated prediction markets.
The proposed binary options would pay a fixed sum or expire worthless. A call on the S&P 500 at 7,000, for example, pays only if the index closes at or above that level.
This yes-or-no structure mirrors contracts on prediction markets. Contracts there trade between $0.01 and $0.99 and settle at $1 if the chosen outcome occurs.
Cboe originally introduced binary options in 2008 but later removed them. Institutional traders dominated, and retail participation remained limited.
U.S. regulators have previously expressed concerns about binary options. The SEC issued warnings in 2013 regarding investor losses, often linked to unregistered offshore platforms.
Cboe Exchange plans to create a compliant product after strict legal checks. “It will provide a clear entry point for new users of options,” said JJ Kinahan, head of retail expansion for Cboe Exchange.
Event-driven trading is expanding rapidly into sports, politics, and finance. Markets are now active on outcomes from NFL games to future CFTC leadership.
Prediction markets saw record growth in January. The combined trading volume for Kalshi and Polymarket exceeded $17 billion, according to data.
Galaxy Research has reported that prediction markets are in a new era of visibility. The report also noted that liquidity remains a limiting factor for many contracts.
Event contracts are becoming more accessible, with Coinbase recently making them available on Kalshi. Goldman Sachs is also exploring these markets, awaiting developments in U.S. regulatory talks.
