Cboe enters the prediction market! Pushing the "Three Outcomes" framework breaks the binary limitations of right and wrong; even with the correct direction, you can still earn returns.

One of the world’s largest derivatives exchanges, Cboe Global Markets, officially announces its entry into prediction markets, with a gameplay approach that is entirely different from existing platforms like Polymarket and Kalshi. On March 9 Taipei time, Cboe’s official announcement disclosed the launch of a new “Prediction Market Framework,” which introduces a third dimension called “Payout Zone” beyond the traditional binary “Yes/No” contracts, allowing traders who are correct in direction but not precise in prediction to also receive returns.
(Background: The Wall Street Journal reports: Polymarket and Kalshi are racing toward a $20 billion valuation! The prediction market giants are in a new round of funding talks.)
(Additional context: Polymarket pre-market prediction that WBC Australia will win, giving Taiwanese baseball fans a lesson in prediction markets.)

Table of Contents

Toggle

• Breaking the “Yes/No” binary: adding the “Partial Payout Zone” as a third dimension
• Inspired by vertical spreads: a “mass-market” packaging of options logic
• Product specifications: Mini-SPX, OCC clearing, Q2 launch
• Background: traditional exchanges accelerating their push into prediction markets

Prediction markets are now seeing strong entry from traditional financial giants. On March 9 Taipei time, Cboe Global Markets (CBOE), one of the largest derivatives and securities exchanges, officially announced the launch of a new “Prediction Market Product Framework,” pioneering a contract structure with three possible outcomes, breaking the conventional event contract’s binary “all or nothing” framework. The plan is to launch the first prediction contract based on the Mini S&P 500 Index (Mini-SPX) as early as Q2 2026.

Breaking the “Yes/No” binary: adding the “Partial Payout Zone” as a third dimension

The core innovation of Cboe’s new framework lies in adding a “Payout Zone” between the traditional “full payout at $100” and “exit at $0.” Under this framework, settlement results for traders can be one of three:

• Zero payout ($0)
• Partial payout (within the Payout Zone)
• Full payout ($100)

This means that even if traders do not predict the exact final outcome, as long as their prediction is correct in direction and falls within the preset range, they can receive a partial return — unlike traditional binary contracts where no return is given if the prediction is off.

JJ Kinahan, head of retail expansion and alternative investment products at Cboe, stated that real-world perspectives are not black-and-white and investors should not be confined to a “yes or no” framework. This more nuanced model aims to reward insightful judgment, allowing retail investors to earn even if they “guess the direction correctly but miss the mark.”

Inspired by vertical spreads: a “mass-market” packaging of options logic

Cboe explicitly states that the design of this contract was inspired by vertical spread strategies in traditional options markets, which are among the most popular options strategies among retail traders. Rob Hocking, head of global derivatives at Cboe, pointed out that this product essentially packages the vertical spread mechanism into a more intuitive, accessible form for a broader audience, emphasizing:

“There is a clear demand for event trading around the S&P 500, and this new contract simply makes it easier for more people to participate.”

Supporting data also points in this direction: by 2025, the daily average volume of 0DTE (same-day expiration) SPX options vertical spreads approaches 580,000 contracts, indicating strong ongoing demand for directional, limited-risk trading strategies.

Product specifications: Mini-SPX, OCC clearing, Q2 launch

The first product references the Mini S&P 500 Index (Mini-SPX), allowing traders to express views on the US stock market trend (e.g., whether the S&P 500 will close above a certain level today). Specifics include:

• Contract type: Securities-based, packaged as options, cash-settled, similar to standard index options
• Listing venue: Cboe Options Exchange
• Clearing: Centralized clearing provided by OCC (Options Clearing Corporation)
• Patent pending: Cboe is currently applying for patent protection

Cboe also plans to extend this framework to more indices or individual stocks in the future, initially focusing on the SPX ecosystem. Built on the deepest and most liquid index options market globally, this approach aims to ensure more accurate pricing, transparency, and robust risk management.

Background: Traditional exchanges accelerating their push into prediction markets

This announcement marks a key step for Cboe’s entry into the prediction market space. As early as February 2026, CoinDesk reported that Cboe was secretly discussing related products with brokerages and market makers, foreshadowing today’s official announcement. Hocking stated during the February earnings call that prediction markets are a logical extension of Cboe’s existing strengths, capable of attracting new customers and serving as an entry point for users to explore a broader range of Cboe products.

It is noteworthy that Cboe’s timing coincides with the U.S. SEC and CFTC providing clearer regulatory frameworks for prediction markets. Compared to platforms like Polymarket (blockchain-based, with some regulatory controversy) and Kalshi (regulated by CFTC), Cboe, as a licensed and regulated exchange with OCC clearing, offers higher compliance certainty for institutional investors and mainstream brokerages.

In fact, prediction markets have attracted attention from traditional financial institutions in recent years: Coinbase previously partnered with Kalshi to launch prediction market trading, and Robinhood has also entered this space. Cboe’s approach—leveraging options technology, regulatory compliance, and a three-outcome framework—is seen as one of the most integrated and competitive among traditional exchanges.