Cboe Revives “All-or-Nothing” Binary Options to Challenge Prediction Market: WSJ

A major derivatives exchange, Cboe Global Markets, is considering a revival of all-or-nothing binary options to retail investors in order to rival the fast-growing prediction markets, as reported by the Wall Street Journal.

The report said that Cboe is in preliminary discussions with retail brokerages to renew the fixed-return options contracts, which would allow single investors to make simple yes-or-no trades on the financial performance.

The exchange is also negotiating with market makers that could provide liquidity for the products.

Rising Prediction Market Activity Draws Cboe Back to Binary Options

Cboe indicated the discussions are still in the early stages and that any initiation would have to go through a lengthy legal and regulatory process.

Binary options, also known as digital or fixed-return contracts, are contracts that pay a fixed amount in case a particular condition is fulfilled at expiration and nothing otherwise.

As an illustration, an S&P 500 contract would pay a person a fixed amount of money in cash in case the index closes above a particular point, and the buyer would lose all the stake in case of a low closing.

The structure is similar to prediction market contracts, also settling to a complete payout or none, and is valued to infer the likelihood of a result.

The renewed interest of Cboe is due to the fact that prediction markets have gained popularity.

Platforms like Kalshi and Polymarket have grown exponentially as traders are dedicating capital to contracts in financial markets, sports, and political or cultural events.

The two platforms posted over $17 billion in trading volume in January, which is the highest monthly volume in history.

Additionally, January was the fifth straight month of rising activity across the sector.

Cboe Plans Simpler Options to Capture Rising Retail Demand

Cboe executives have said the exchange plans to keep its focus on financial markets rather than branching into broader event betting.

Rob Hocking, Cboe’s global head of derivatives, said in the report that the exchange seeks to introduce simpler, event-based contracts designed to attract retail investors and potentially guide them toward more advanced options products.

Cboe previously experimented with binary options in 2008, launching contracts tied to benchmarks such as the S&P 500 and the Cboe Volatility Index, but the products saw limited adoption in a market dominated by institutional traders and were later delisted.

However, the sector has since changed as retail participation in derivatives surged following the market rebound after the COVID-19 crash, and options trading has reached record levels.

The Options Clearing Corp. reported that an average of 61 million options contracts changed hands daily in 2025.

A Checkered Past Shadows the Comeback of Binary Options in U.S. Markets

Binary options have a troubled history in the U.S., with regulators long warning about their high-risk, all-or-nothing structure.

In 2013, the SEC cautioned that investors typically lose money and flagged widespread fraud tied to unregulated offshore platforms, including market manipulation and blocked withdrawals.

Today, binary options are legal in the U.S. only on regulated exchanges under SEC or CFTC oversight, while offshore offerings to U.S. residents remain illegal.

Cboe said any new contracts would meet strict compliance standards, with the exchange working closely with regulators to determine the appropriate oversight before listing.

The timing of the talks also reflects structural changes in the regulated binary options market.

Long-standing major U.S. provider of such contracts, Nadex, in December declared it was moving to Crypto.com and ceased accepting new traditional retail customers, restricting access to traders.