Cboe Resumes Binary Options in Response to Prediction Market Boom

The explosion of the prediction market is attracting the attention of major operators. Cboe Global Markets is in preliminary negotiations with retail brokers and market makers to relaunch binary options contracts, a product it had removed from its portfolio years ago. This move reflects the growing opportunity in this segment, which has been expanding rapidly.

Exponential Growth in the Prediction Market

The sector’s momentum is undeniable. In January, specialized platforms like Kalshi and Polymarket recorded a record monthly trading volume of $17 billion. This impressive performance demonstrates strong demand for prediction tools and signals to major market players that ignoring this segment could result in significant market share loss. As a well-established derivatives operator, Cboe cannot stay on the sidelines of this trend.

Cboe’s Strategy with Binary Options

The company is no stranger to the subject. Cboe originally launched binary options contracts in 2008 but later discontinued them. Now, it aims to reposition this product as an accessible entry point for retail investors into the options universe. This approach recognizes that binary options, due to their structural simplicity, can attract a less sophisticated audience to derivatives markets, expanding the user base.

Regulatory Milestone and Next Steps

The success of this initiative will depend on regulatory approval. Cboe is coordinating with supervisory agencies to frame binary options under the appropriate oversight of the SEC or CFTC. This approach ensures regulatory compliance while positioning the product competitively. The reintroduction of binary options into the market, under this new framework, could redefine retail access to derivatives trading.