Cboe Global Markets is set to innovate event-driven trading with a new framework that suggests contracts with payouts of $0, partial amounts, or $100 based on fluctuations in the S&P 500 Index.
The exchange has revealed an initiative for a prediction markets structure aimed at transforming how traders engage with outcome-based contracts. This proposal presents a contract model offering three different outcomes, as opposed to the conventional two-result format seen in current event contracts.
Three-Outcome Contract Structure
Using Cboe’s proprietary, patent-pending framework, contracts may yield either a $0 payout, a partial payout within a specified “payout zone,” or a full payout of $100. This enhanced payout model enables participants to receive returns when their directional forecast is correct, even if the actual outcome doesn’t match the predicted level precisely.
Cboe intends to launch this structure via a Mini-SPX prediction market contract linked to the daily closing level of the S&P 500 Index. Traders will have the option to take a classic “yes” or “no” stance or utilize the payout-zone option to minimize potential losses while still profiting when the market direction aligns with their expectations.
“Our new prediction market contracts effectively integrate the principles of a conventional vertical spread— a widely utilized options strategy—into a more user-friendly and accessible format for a wider audience,” noted JJ Kinahan, head of retail expansion and alternative investment products at Cboe.
“These contracts will provide enhanced flexibility and explicitly defined risk compared to traditional event contracts, offering the ability to gain a partial return when traders have a directional accuracy. Perspectives in the real world are not always binary, and investors should not be limited to just a yes-or-no approach.”
Kinahan explained that the model aims to recognize informed viewpoints, crediting retail traders even when they are only partially correct, and introducing a novel method for individuals to engage in outcome-based trading “that isn’t available today.”
Implementation Timeline and Contract Features
Cboe announced that the first Mini-SPX prediction market contract is projected for release in the second quarter of 2026.
This contract will incorporate a traditional options wrapper to produce fixed-return outcomes and will be settled in cash, akin to standard index options. The product will be listed on the Cboe Options Exchange and centrally cleared via the Options Clearing Corporation.
The framework may also facilitate the creation of additional contracts linked to other indices or individual stocks in the future.
“There’s a clear demand from customers to engage with market events surrounding the S&P 500 Index, and our new SPX prediction market contracts will simplify participation for a broader audience,” stated Rob Hocking, global head of derivatives at Cboe.
“What distinguishes our offerings from other SPX event contracts is that ours are built directly atop the SPX options ecosystem—one of the deepest and most liquid options markets globally. This ensures that pricing is based on real market action, allowing customers to benefit from the transparency, liquidity, and protections provided by our regulated securities exchange.”
Growing Interest in Directional Trading Strategies
Cboe highlighted trading data on vertical spreads to demonstrate the growing interest in directional strategies linked to the S&P 500 Index.
In 2025, trading in vertical spreads reached nearly 580,000 contracts per day in 0DTE SPX options, illustrating retail interest in strategies focused on market direction while mitigating downside risk.
“We are excited to encourage continued innovation within the S&P 500 framework. Cboe’s forthcoming prediction market contracts will enable new investors to capitalize on the market-leading integrity, governance, and reliability of the S&P 500, all within an accessible contract structure,” commented Cameron Drinkwater, chief product and operations officer at S&P Dow Jones Indices.
“As leaders in retail options trading and partners with Cboe, we are thrilled to witness Cboe’s ongoing innovations in the financial markets and anticipate continuously introducing new instruments to address client demand,” remarked James Kostulias, head of trading services at Charles Schwab.
The suggested prediction markets framework draws from traditional options market principles while presenting a structure that expands beyond the binary outcomes of conventional event contracts.