Cboe Revives “All-or-Nothing” Binary Options to Compete with Prediction Markets

Cboe Global Markets is exploring the reintroduction of all-or-nothing binary options for retail investors to compete with the booming prediction market. This initiative aims to allow individuals to make straightforward yes-or-no trades on the performance of financial assets. Cboe is currently in discussions with retail brokers and market makers to facilitate this revival within the regulatory framework.

Key Takeaways

Cboe is considering bringing back all-or-nothing binary options as a response to the success of prediction markets.
Current discussions are in early stages, focusing on compliance with regulatory standards.
Binary options allow for simple yes-or-no trades based on financial outcomes.
The growing popularity of prediction markets indicates a strong retail demand for these types of contracts.
Cboe aims to create simpler options for retail investors, transitioning towards more sophisticated trading products.

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

Cboe's Renewed Interest in Binary Options

Cboe Global Markets, one of the leading derivatives exchanges, is contemplating the reintroduction of all-or-nothing binary options for retail investors. This move is in response to the increasing sway of prediction markets, as detailed in a recent report by the Wall Street Journal.

According to the report, Cboe is currently engaged in preliminary talks with retail brokerages to reintroduce fixed-return options contracts. These contracts would enable individual investors to perform straightforward yes-or-no trades based on specific financial outcomes.

Additionally, Cboe is in discussions with market makers who could provide necessary liquidity for these new products.

Increased Activity in Prediction Markets

Cboe's renewed focus comes at a time when prediction markets have gained significant traction. Notable platforms like Kalshi and Polymarket have seen tremendous growth as traders invest in contracts related to financial, sports, and political events.

These two platforms recorded over $17 billion in trading volume in January—marking the highest monthly figure ever—and experienced a continuous increase in activity for five consecutive months.

Cboe's Strategy for Attracting Retail Investors

Cboe executives emphasize their commitment to focusing on financial markets, rather than broader event wagering. Rob Hocking, Cboe's global head of derivatives, mentioned that the exchange intends to introduce simpler, event-driven contracts created to attract retail investors and possibly lead them to more advanced options products.

Previously, Cboe tested binary options back in 2008, launching contracts linked to benchmarks like the S&P 500 and the Cboe Volatility Index. However, these products faced limited adoption among institutional traders and were subsequently delisted.

With the upsurge in retail participation after the COVID-19 market rebound, the derivatives trading landscape has changed significantly. The Options Clearing Corporation reported that an impressive average of 61 million options contracts traded daily in 2025.

The Complex History of Binary Options in the U.S.

Although binary options offer simple trading opportunities, they come with a complicated history in the U.S. Regulatory authorities have issued long-standing warnings regarding the high-risk and all-or-nothing nature of these options.

In 2013, the SEC alerted investors to the significant risks, noting that many investors typically lose money and highlighting widespread fraud associated with unregulated offshore platforms, including cases of market manipulation and obstructed withdrawals.

Currently, binary options are permitted in the U.S. only on regulated exchanges under the oversight of the SEC or the CFTC, while offerings from offshore providers to U.S. residents remain illegal. Cboe has stated that any new contracts will comply with stringent standards, working closely with regulators to ensure appropriate oversight before their listing.

The timing of these discussions corresponds with structural shifts in the regulated binary options market, notably with Nadex, a long-established provider of such contracts, declaring in December its transition to Crypto.com and ceasing to accept new traditional retail customers.