WSJ: Cboe Aims to Relaunch Binary Options Trading, Aiming to Directly Compete with Prediction Markets
BlockBeats News, February 2nd. According to The Wall Street Journal on Monday, major derivatives exchange Cboe Global Markets is exploring a relaunch of binary options trading for retail investors, aiming to directly compete with the rapidly growing prediction market space.
The proposed contracts would operate as a fixed-income derivative: either paying a predetermined amount or expiring worthless, similar to the return structure commonly seen on prediction platforms. For example, a binary call option linked to the S&P 500 Index at 7000 points would pay a predetermined return if the index closes at or above that level at expiration, with zero return if below.
Traders on prediction platforms use a similar "yes/no" structure, with contracts typically trading between $0.01 and $0.99 and settling at $1 when the outcome is correct.
Cboe first listed binary options tied to major financial indices in 2008 but delisted them later due to a lack of appeal in the institutionally dominated market at the time. Such products have also faced regulatory scrutiny, with the U.S. Securities and Exchange Commission (SEC) warning of potential investor loss risks in 2013, and U.S. regulators documenting multiple fraud complaints against unregulated binary options websites. This time, the exchange will focus on regulatory compliance and product design as part of the product's launch plan.
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