Cboe Tests ‘Yes‑or‑No’ Options in the U.S., Positioning Itself Against Prediction Markets

Cboe Global Markets is exploring a derivatives product that would deliver a fixed payoff when a discrete event occurs and zero otherwise, packaging the binary payoff inside an options‑style wrapper rather than a purely betting or decentralized model. The exchange is in preliminary consultations with broker‑dealers and liquidity providers as it tests contract specifications that could settle to a set cash amount or to zero. Key design choices — settlement timing, contract unitization, margining, whether the trigger is a discrete news event or a price threshold and how clearing will work — will shape hedging complexity and market‑maker willingness to post two‑sided quotes. Regulators’ eventual classification and oversight will materially affect capital treatment and reporting compared with on‑chain or CFTC‑regulated event platforms. Cboe’s move revives a concept the exchange experimented with more than a decade ago; that earlier attempt failed to sustain liquidity, and lessons from those products are informing the redesign. Parallel to Cboe’s effort, crypto‑native venues and protocol teams are advancing similar payoff mechanics: for example, a recently announced testnet called “Outcomes” (by a crypto project) uses on‑chain execution and USD‑pegged token rails to deliver fully collateralized, bounded contracts that remove leverage and liquidation pathways. That model standardizes counterparty risk and simplifies settlement and accounting for on‑chain users, while the exchange‑based approach emphasizes institutional counterparties, regulated clearing and familiar account flows. The two paths present trade‑offs: on‑chain Outcomes‑style contracts reduce margining complexity and appeal to traders seeking capped, collateralized exposure, whereas an exchange wrapper may attract institutional flow but must contend with existing derivatives rules and surveillance expectations. User experience is a stated priority for Cboe, which believes simplifying access and clarifying outcomes could broaden mainstream participation; crypto testnets similarly emphasize simple payoff profiles and community feedback through iterative releases. Commercial economics will depend on take rates, average trade size and the ability to generate continuous liquidity rather than episodic surges tied to headline events. Market‑integrity issues — manipulation risk around event windows, concentrated positions, and information asymmetries — will require surveillance and possibly bespoke rules on either venue type. If executed well, a regulated exchange offering might channel institutional and retail flow away from decentralized prediction markets; if not, liquidity could be episodic and revenues limited. Cboe has not announced launch dates or a scope of initial events, leaving open how quickly counterparties will commit capital and which specific contract forms will be adopted.