Cboe Eyes a Return to Binary Options to Compete With Prediction Markets
Cboe Global markets has recently confirmed to The Wall Street Journal that it is in preliminary talks with brokers and market makers to relaunch binary options in the U.S. market in order to compete with the massively popular prediction market.
Cboe originally pioneered these contracts in 2008, focusing on the S&P 500 and the VIX (Volatility Index). However, the contracts were eventually delisted due to a lack of liquidity and investor interest.
“Imagine we enter the event-driven instruments market, using these products to offer a simpler contract in this format, similar to what you see on other platforms,” Rob Hocking, Cboe’s global head of derivatives, told the WSJ.
This renewed interest has all to do with the changing landscape and the retail trading boom fueled by mobile apps and social media. By reintroducing binary options contracts to the U.S. market, Cboe plans to directly challenge rising prediction market upstarts like Polymarket and Kalshi.
Despite this recent optimism, however, the path to a relaunch will probably be rocky, as binary options have long been associated with unregulated offshore brokers and scams that gave the product a predatory reputation.
JJ Kinahan, Cboe’s head of retail development, emphasized that the company is prepared for a "lengthy compliance process."
The exchange will need to convince the U.S. Commodity Futures Trading Commission (CFTC) that these products serve a legitimate hedging or economic purpose rather than being a mere vehicle for gambling, which is the exact same issue that Kalshi has already dealt with in numerous state jurisdictions.
Still, with the largest drivers of intraday trading now being zero-to-day-expiration options (0DTEs), and with gambling revenue representing more and more of the country’s GDP, a return of binary options to the U.S. market doesn’t seem as far-fetched as just a few years earlier.
On the contrary, this maximum-risk, all-or-nothing retail trading culture we’re living in makes this return more of an inevitability than anything else.
I have always thought of myself as a writer, but I began my career as a data operator with a large fintech firm. This position proved invaluable for learning how banks and other financial institutions operate. Daily correspondence with banking experts gave me insight into the systems and policies that power the economy. When I got the chance to translate my experience into words, I gladly joined the smart, enthusiastic Fortunly team.
