March 9 (Reuters) – Derivatives and securities exchange operator Cboe said on Monday it plans to launch prediction market contracts offering partial payouts based on the accuracy of traders’ predictions, moving beyond the traditional all-or-nothing format.
The move mirrors features used in betting apps, where users can cash out wagers early as events progress, and is inspired by concepts such as traditional vertical spread in the options markets.
“Real-world opinions aren’t always binary, and investors shouldn’t be confined to a yes-or-no framework,” said JJ Kinahan, Head of retail expansion and alternative investment products at Cboe.
The exchange plans to debut the framework through a Mini S&P 500 Index prediction market contract and it follows Cboe’s exploration of a new regulated product that would use an options structure to offer all-or-none payouts.
Major U.S. exchange operators are increasingly seeking to tap into the event prediction markets space, which has surged into the mainstream since the 2024 U.S. presidential race.
Exchange operator Nasdaq is also seeking SEC approval to launch prediction market style options tied to major stock indexes, while Intercontinental Exchange has invested up to $2 billion in Polymarket.
(Reporting by Pragyan Kalita in Bengaluru; Editing by Vijay Kishore)
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