Charles Schwab, one of the largest U.S. financial services firms with $11.8 trillion in total customer assets, is preparing to enter the prediction market space by offering event-based options tied to the S&P 500 index. The move, reported by the Wall Street Journal and confirmed by the company, represents a strategic expansion into binary-style derivatives that allow clients to wager on or hedge against specific index outcomes.
The new contracts will be developed in partnership with Cboe Global Markets and will function as binary options: they pay a fixed amount if the S&P 500 closes above a predetermined level at expiration, and nothing if it closes below. Unlike traditional options, where value fluctuates with the underlying asset, these event-based contracts offer a simplified, all-or-nothing payout structure. Schwab CEO Rick Wurster had telegraphed the move during the firm’s first-quarter earnings call, stating it would “likely have prediction markets,” while drawing a clear line against sports or entertainment betting.
According to the report, the product will also include a “Plus Zone” feature that pays a discounted multiple to traders whose predictions are close but not exact—rewarding those who are “mostly right.” This innovation could attract a broader base of retail investors accustomed to simpler risk-reward profiles. The contracts will be listed on Cboe’s regulated exchange, providing a layer of oversight absent from unregulated offshore platforms.
The rollout is expected in the coming months, pending final regulatory approvals. Schwab may eventually extend the offering to other indexes or key financial benchmarks. The firm has recently expanded its digital asset footprint, launching spot trading for Bitcoin and Ethereum to a group of retail users after a successful employee pilot. Despite these moves, shares of Charles Schwab (SCHW) closed down nearly 3% on the day, at around $91.70, with U.S. markets closed Friday for the Juneteenth holiday.
