Cboe Global Markets has announced plans to launch a prediction market framework that allows traders to take positions on market outcomes beyond the traditional binary payout. The contracts are designed to expand outcome-based trading by providing payouts even when predictions are only partly correct.

Prediction markets have attracted retail traders, with platforms like Robinhood and Kalshi reporting strong uptake. Exchanges including Intercontinental Exchange and CME Group have also tested similar products, integrating event-based instruments into regulated markets and complementing traditional derivatives and options strategies.

New ‘Payout Zone’

Most event contracts currently offer only two outcomes: a full payout if correct, or nothing if wrong. Cboe’s framework introduces a third option. Contracts would settle at $0, a partial payout within a defined “payout zone,” or a full $100 payout. The exchange said this allows traders to benefit when predictions are directionally correct, even if the exact target is missed.

JJ Kinahan, Head of Retail Expansion and Alternative Investment Products at Cboe, said the contracts “take the mechanics of a traditional vertical spread” and package them “in an intuitive, accessible format for a broader audience.” He added they provide defined risk and allow traders to “earn a partial return when traders are directionally correct.”

Mini S&P 500 Contract

The first contract will be a Mini S&P 500 Index prediction market product. It allows traders to take positions on where the index may close at the end of a trading day. Participants can choose a traditional “yes” or “no” position. Alternatively, they can use the payout zone to reduce losses if the index moves in the expected direction but does not reach the exact level.

The contract will use a traditional options structure with fixed returns and settle in cash. Cboe said it will list the product on the Cboe Options Exchange, with clearing through the Options Clearing Corporation. The launch is expected in the second quarter of 2026.

SPX Prediction Contracts Target Short-Dated Options

Cboe linked the product to retail demand for short-dated S&P 500 options, which averaged 580,000 vertical spread contracts per day in 2025. Rob Hocking, Global Head of Derivatives at Cboe, said there is “clear customer demand to trade around market events tied to the S&P 500 Index,” and the contracts are built “directly on top of the SPX options ecosystem.”

Cameron Drinkwater of S&P Dow Jones Indices said the contracts allow new investors access through a simple structure. James Kostulias of Charles Schwab said the brokerage expects to support the products if client demand develops. Cboe may extend the framework to other indices or stocks in the future.

This article was written by Tareq Sikder at www.financemagnates.com.Institutional FXRead More

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