Cboe Predicts Targets Prediction Markets on 0DTE Surge

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Cboe Global Markets launched Cboe Predicts on June 23, 2026, entering the prediction markets arena with Mini-S&P 500 binary option contracts backed by OCC clearing and existing 0DTE liquidity.

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What Happened

The initial Cboe Predicts offering centers on two XSP binary option contracts—listed under tickers XSPBW and XSPBX—that pay $100 at expiry if the trader's directional call is correct and $0 if it is not. The XSP index is sized at one-tenth the value of the standard S&P 500 Index (SPX), keeping per-contract exposure accessible to retail participants.

Cboe's structure goes beyond the conventional binary model. In March 2026, the company previewed a patent-pending three-outcome payout framework: contracts can expire at $0, at a full $100, or at a partial payout for traders who are directionally correct but whose target is not precisely hit—a design the company describes as packaging the mechanics of a traditional vertical spread into an intuitive format. All contracts are listed on the Cboe Options Exchange and centrally cleared by the Options Clearing Corporation (OCC), placing them inside the same regulatory and counterparty infrastructure as standard U.S. listed options.

A next-generation offering—XSP vertical spreads executed through a Quoted Spread Book (QSB) framework—is slated to follow, broadening the range of payoff profiles available under the Cboe Predicts umbrella.

Strategic Context

The prediction markets push is rooted directly in the rise of zero-day-to-expiry (0DTE) options. Those contracts, which expire the same trading day, now represent 61% of all SPX option volume at Cboe, up from 51% a year earlier. In 2025, vertical spread trades within 0DTE SPX options alone averaged nearly 580,000 contracts per day—a figure Cboe management has cited as direct evidence that retail demand for defined-risk, short-duration products is structural rather than cyclical.

That demand drove record results for the exchange. Cboe posted full-year 2025 net revenue of $2.4 billion, a 17% year-over-year increase, with index options revenue rising 40% and overall derivatives revenue climbing 22%. In the first quarter of 2026, revenue grew 29% and earnings per share beat analyst consensus by $0.33.

Competitive Landscape

The prediction markets space that Cboe is entering is occupied by two distinct archetypes. Polymarket operates as a blockchain-based platform with limited U.S. regulatory oversight, while Kalshi trades event contracts under Commodity Futures Trading Commission jurisdiction as a designated contract market. Cboe takes a third path: its binary options are securities-based instruments cleared by OCC, falling under the Securities and Exchange Commission's established listed options framework.

That positioning is central to Cboe's distribution strategy. Charles Schwab has confirmed a rollout expected within months, joining Interactive Brokers as a launch partner. James Kostulias, Head of Trading Services at Charles Schwab, said the firm "supports approaches that bring transparency, defined risk, and investor education to financial-related prediction markets." Additional retail brokerage platforms are expected to follow as broker compliance and technology teams complete integration.

The regulatory backdrop is shifting in Cboe's favor. Both the SEC and CFTC have signaled intent to provide clearer guidance on prediction market instruments, a development that market participants expect to accelerate institutional and retail broker participation across the sector.

Technology and Infrastructure

The forthcoming Quoted Spread Book framework borrows directly from institutional options market-making architecture—automated quoting engines that maintain continuous two-sided markets. Rather than building a standalone prediction market order book from scratch, Cboe routes liquidity through the existing SPX ecosystem. The approach reduces execution risk and tightens spreads from day one, a structural advantage that newer entrants relying on nascent order books cannot immediately replicate.

Distribution and Education

Cboe is pairing the product launch with a dedicated prediction markets resource hub and new curricula through its Options Institute, which has provided investor education for more than four decades. JJ Kinahan, Cboe's Head of Retail Expansion and Alternative Investment Products, linked the launch explicitly to the 0DTE franchise: "Following the success of SPX 0DTE options, we have seen continued customer demand for shorter-dated, outcome-based trading, creating a natural extension for Cboe to introduce XSP binary options."

Outlook

Cboe enters prediction markets with structural advantages that newer entrants cannot easily replicate: a regulated exchange listing, OCC clearing, deep SPX liquidity, a brokerage distribution network, and four decades of retail investor education infrastructure. The 0DTE options boom provides both a validated demand signal and an existing customer base already comfortable with short-duration, defined-risk contracts. Near-term execution will focus on broadening broker distribution and rolling out the three-outcome vertical spread product under the QSB framework. Longer-term, Cboe has indicated plans to expand prediction market contract coverage beyond equity indices into other financial and economic event categories, with evolving SEC and CFTC guidance expected to define the outer boundaries of that expansion.