Charles Schwab to Launch S&P 500 Prediction-Market Product With Cboe

Charles Schwab is joining Wall Street's prediction-market boom.

The Wall Street Journal reported on June 19 that Schwab plans to work with Cboe Global Markets to launch options contracts tied to the performance of the S&P 500 Index. The product would let investors bet on whether the index will close above or below a target level.

Unlike the futures-based prediction markets offered by platforms such as Kalshi and Polymarket, the new product would be structured as an option. It would pay a fixed amount in cash if the index reaches the target and nothing if it does not. Schwab plans to offer the product to clients in the coming months.

Schwab also plans to incorporate Cboe's Plus Zone feature. That would allow investors to receive a partial payout even if the index does not close exactly at the target, as long as the direction of the bet is broadly correct.

Chief Executive Officer Rick Wurster has previously said event contracts tied to sports or entertainment outcomes blur the line between investing and gambling. In December, he said prediction markets were not a priority for the firm, while leaving open the possibility of entering the business if they became essential in the brokerage industry.

Schwab plans to limit the product to events with verifiable outcomes in financial markets. It does not intend to offer non-financial event contracts such as bets on the World Cup or next year's Oscar winners.