Cboe Global Markets is in discussions with retail brokerages to relaunch “all-or-nothing” options contracts for individual investors that would vie with prediction markets.

Cboe said the talks with brokerages remain at an early stage. The exchange is also discussing its plans for these new contracts—which could include revamped binary options, sometimes called fixed-return contracts—with market makers that would execute those trades. Traders use binary options to place yes-or-no wagers on a given event.

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Much like prediction-market contracts, these derivatives either pay a set cash settlement or nothing at all. For example, binary call options tied to the S&P 500 index closing at 7000 would pay a fixed amount to the holder if the index settles at or above that level when it expires. Likewise, the holder loses all of his initial bet if the S&P 500 closes below that mark.

The move would put Cboe in direct competition with the prediction markets. Platforms such as Kalshi and Polymarket surged in popularity this past year as individual investors grew more comfortable with riskier trades, and gained confidence in their ability to call newsy events ranging from the outcome of the Super Bowl and the direction of the stock market to the winners of Golden Globes.

Kalshi and Polymarket are exchanges in their own right, and the wagers their users place are another form of derivatives contact. The prices of those bets, which usually range from around a penny to 99 cents, reflect traders’ views on the probability of one outcome or another. And when they are resolved, the winners receive $1 for getting it right. The losing side gets nothing.

“Think of us entering the event space, using those products to offer a more simplistic event-style contract like you’re seeing on other platforms,” said Rob Hocking, Cboe’s global head of derivatives.

One crucial difference: Cboe intends to stick to its knitting in financial markets. In time, the exchange hopes, investors in its all-or-nothing options will graduate to trades involving more sophisticated contracts.

Cboe previously launched binary call options tied to the S&P 500 and Cboe Volatility Index in 2008. But they gained little traction in a market where options were generally reserved for Wall Street professionals. Cboe later delisted binary options.

The stock-market rally after the Covid-19 crash reawakened many Americans’ interest in the markets, and in recent years some moved beyond buying stocks and exchange-traded funds to more complicated, and often riskier, investments—including options. A record average 61 million options changed hands daily in 2025, according to the OCC, or Options Clearing Corp.

The day traders are back, and the surging popularity of prediction markets is the latest byproduct of this renewed confidence and the role technology has played in placing sophisticated financial tools in the palm of their hands (through their mobile phones).

Wall Street has a complicated history with binary options, which have long been associated with risk-it-all behavior and fraud. The Securities and Exchange Commission warned in 2013 that there are cases where “an investor could expect, on average, to lose money.”

The regulator also said that it, along with the Commodity Futures Trading Commission, had received “numerous” fraud complaints regarding unregulated websites that offered the ability to trade binary options that resulted in identity thefts, manipulation to ensure losing trades and refusal to reimburse traders.

JJ Kinahan, Cboe’s head of retail expansion and alternative investment products, said the exchange plans to “go through a lot of rigor” to meet requirements on the legal and compliance sides before listing the new contracts, which would be regulated by either the SEC or CFTC.

“This is really, to me, the new starting point for many people in terms of how to get into the options space,” Kinahan said.

Write to Krystal Hur at krystal.hur@wsj.com

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