Event-based trading could move beyond binary outcomes under a new framework from Cboe Global Markets, which proposes contracts with $0, partial, or $100 payouts linked to movements in the S&P 500 Index.
The exchange operator outlined plans for a prediction markets framework designed to change how traders participate in outcome-based contracts. The proposal introduces a contract structure that includes three possible results instead of the two outcomes typically offered in event contracts.
Three-outcome contract model
Under Cboe’s proprietary and patent-pending framework, contracts could settle with a $0 payout, a partial payout within a defined “payout zone,” or a full $100 payout. The additional payout structure allows participants to receive a return when the directional view proves correct, even when the result does not land exactly on the predicted level.
The company plans to introduce the structure through a Mini-SPX prediction market contract tied to the daily closing level of the S&P 500 Index. The contract would allow traders to take a traditional “yes” or “no” position or use the payout-zone position intended to reduce potential losses while allowing a return when the market direction proves correct.
“Our new prediction market contracts essentially take the mechanics of a traditional vertical spread – one of the most popular options strategies – and package them in an intuitive, accessible format for a broader audience,” said JJ Kinahan, head of retail expansion and alternative investment products at Cboe.
“These contracts will offer greater flexibility and clearly defined risk compared to traditional event contracts, along with the opportunity to earn a partial return when traders are directionally correct. Real-world opinions aren’t always binary, and investors shouldn’t be confined to a yes-or-no framework.”
According to Kinahan, the model is designed to reward informed perspectives, giving retail traders credit even when they are mostly right, and introduce a new way for people to engage with outcome-based trading “that simply doesn’t exist today.”
Launch plans and trading structure
Cboe said the first Mini-SPX prediction market contract is scheduled for launch in the second quarter of 2026.
The contract would use a traditional options wrapper to deliver fixed-return outcomes and would settle in cash, similar to standard index options. The product would be listed on the Cboe Options Exchange and centrally cleared through the Options Clearing Corporation.
The framework could also support additional contracts tied to other indices or individual stocks in the future.
“There is clear customer demand to trade around market events tied to the S&P 500 Index, and our new SPX prediction market contracts will just make it easier for even more people to participate in that activity,” said Rob Hocking, global head of derivatives at Cboe.
“What sets our products apart from other SPX event contracts is that ours are built directly on top of the SPX options ecosystem – one of the deepest and most liquid options markets in the world. This means that pricing is grounded in real market activity, and customers can benefit from the transparency, liquidity, and safeguards of our regulated securities exchange.”
Demand for directional trading strategies
The exchange operator cited trading activity in vertical spreads when outlining interest in directional strategies tied to the S&P 500 Index.
In 2025, vertical spread trades averaged nearly 580,000 contracts per day in 0DTE SPX options, indicating retail demand for strategies tied to market direction while limiting downside exposure.
“We are proud to support continued innovation within the S&P 500 ecosystem. Cboe’s planned prediction market contracts help new investors benefit from the market-leading integrity, governance, and reliability of the S&P 500, within a simple and easy-to-access contract structure,” said Cameron Drinkwater, chief product and operations officer at S&P Dow Jones Indices.
“As the leader in retail options trading and a close partner of Cboe, we are pleased to see Cboe continue to innovate in the financial markets and look forward to continually enabling new instruments as we see the client demand,” said James Kostulias, head of trading services at Charles Schwab.
The proposed prediction markets framework draws inspiration from concepts used in traditional options markets and introduces a structure that moves beyond the two-outcome design found in existing event contracts.
Original article: https://www.yogonet.com/international/news/2026/03/12/118028-cboe-global-markets-to-introduce-threeoutcome-prediction-market-contracts-in-q2
