The proposed product would give clients a way to bet on the direction of index movements, as rivals like Coinbase and Robinhood accelerate their expansion into prediction markets.

Charles Schwab is reportedly working with Cboe Global Markets to roll out a new class of options contracts that allow investors to place binary, yes-or-no wagers on the S&P 500’s performance. The move would mark Schwab’s entry into the prediction markets space, according to a Wall Street Journal report.

The offering could be made available to Schwab customers in the coming months, the report said, citing people familiar with the matter.

Unlike traditional prediction platforms such as Polymarket and Kalshi, which typically rely on futures-style contracts tied to event outcomes, Schwab’s product would function more like a binary option—either paying a fixed amount or expiring worthless depending on whether the S&P 500 finishes above or below a set level.

Schwab and Cboe are also exploring a similar structure tied to Cboe’s “Plus Zone,” which would allow partial payouts if a forecast comes close to the final outcome, even without hitting the exact target.

The firms have discussed extending the product beyond the S&P 500 to other indices and financial benchmarks. However, Schwab is expected to focus on contracts linked to clearly verifiable financial outcomes, avoiding markets tied to politics, sports, or other real-world events.

If launched, Schwab would join a rapidly growing prediction markets sector. Platforms like Kalshi and Polymarket have seen increasing demand from traders looking to speculate on outcomes ranging from elections to economic data releases.

At the same time, crypto and retail brokerages are entering the space, with Coinbase (COIN) and Robinhood (HOOD) recently introducing their own prediction market offerings.