Cboe revives S&P 500 binary options, challenging Polymarket and Kalshi
In brief
- Cboe revives S&P 500 binary options after abandoning them in 2008.
- Binary options pay fixed amounts if outcomes occur, competing with Polymarket and Kalshi.
- Polymarket shows $528K in S&P volume; Kalshi's year-end contract has $4M at stake.
- Cboe's 'plus' feature uses vertical spreads for proportional payouts instead of all-or-nothing.
The comeback play
Cboe first listed binary options on the S&P 500 and the Cboe Volatility Index in 2008, but they failed to draw interest and were pulled, with the last such contract expiring in 2017. The exchange's same-day S&P 500 options now make up about 30% of U.S. options volume—a sign that the market for fast-expiring, directional bets has matured since the first attempt.
What changed? Polymarket and Kalshi proved there is real money in letting people bet directly on outcomes. On Polymarket, a position for "What will S&P 500 (SPX) hit by end of June?" shows more than $528,000 in volume. On Kalshi, the same question has $863,000 in volume, while the year-end bet has more than $4 million hanging on the outcome. These numbers signal real demand.
The regulatory angle
Cboe's product and Polymarket's operate in different worlds. Polymarket runs onchain with bets placed and settled in USDC, a dollar-pegged stablecoin, on a public blockchain. It's open worldwide with no sign-up required. Cboe's contracts, by contrast, are regulated instruments sold through U.S. brokerages—a more traditional wrapper for the same underlying bet.
Cboe is adding a twist it calls "plus," built on a vertical spread, an options structure that pays out proportionally as the index moves rather than all-or-nothing. The contracts will become available on Charles Schwab later this year, and Interactive Brokers is already carrying them.
The broader shift
The prediction-market space is heating up beyond Polymarket and Kalshi. Mark Zuckerberg's Meta said it is building a prediction-market app, and the Nasdaq exchange said it has clearance to list its own binary index options later this year. What was once a fringe corner of finance is becoming mainstream.
