{"id":639,"date":"2026-06-23T07:47:00","date_gmt":"2026-06-23T14:47:00","guid":{"rendered":"https:\/\/quantcha.com\/news\/?p=639"},"modified":"2026-07-23T19:28:17","modified_gmt":"2026-07-24T02:28:17","slug":"who-is-cboes-sp-500-prediction-market-actually-for","status":"publish","type":"post","link":"https:\/\/quantcha.com\/news\/who-is-cboes-sp-500-prediction-market-actually-for\/","title":{"rendered":"Who Is Cboe\u2019s S&P 500 Prediction Market Actually For?"},"content":{"rendered":"\n

Opportunistic marketing or a path to an event contracts future?<\/em><\/p>\n\n\n\n

I have, it turns out, been living in The Plus Zone for years without knowing it. That\u2019s Cboe\u2019s name for the sloped middle of a vertical spread\u2014the part that pays out proportionally between the strikes\u2014which I\u2019d always thought of as simply how a spread works. Apparently it\u2019s a feature now, and an admirably well-named one. My hat is off to the marketing wizard to coined that one\u2014I\u2019ve been in your exact situation and recognize your game.<\/p>\n\n\n\n

But the branding really does work. I laughed out loud when I read the description, and that made me curious enough to read the actual filings. The deeper I went, the more I kept circling one question. It\u2019s not whether this thing is gambling (the fight the media savors) but rather who it\u2019s actually built for.<\/p>\n\n\n\n

Cboe\u2019s own documentation says as much: the verticals are \u201cnot a separate product\u201d but rather \u201cstandard XSP vertical spread strategies.\u201d So if you buy one, you\u2019ll end up with a call spread in your book. As a result, it also requires options spread approval on your account.<\/p>\n\n\n\n

Are prediction markets crossing over already?<\/h3>\n\n\n\n

Last week, Schwab announced<\/a> that they would soon be supporting these spread products through a partnership with Cboe. But what really stood out to me was that both they and Cboe position them as \u201cprediction markets.\u201d<\/p>\n\n\n\n

I\u2019ve regularly used Schwab as a landmark in my exploration of what it will take to get broad adoption of event contracts in mainstream finance. I\u2019ve made cases about the risk of the toxic term \u201cprediction markets\u201d<\/a> and the need for consolidated clearing<\/a> across multiple competing exchanges, plus several other missing pieces<\/a> I thought were blockers to the new asset class.<\/p>\n\n\n\n

But it turns out that I was overthinking it. The missing piece was the humble call spread.<\/p>\n\n\n\n

The experienced options traders out there may ask, \u201cif it\u2019s just a 0DTE call spread on XSP with a $1 strike width, can I just trade them on my own today?\u201d The answer is yes. Yes you can.<\/p>\n\n\n\n

They\u2019re not exactly what I\u2019d consider \u201cprediction markets,\u201d but I\u2019m also the guy who had no idea about The Plus Zone until the press release came out, so maybe my expertise has reached its limit.<\/p>\n\n\n\n

But what if The Plus Zone is too much for me to handle?<\/h3>\n\n\n\n

Good news\u2014they\u2019ve thought of that, too. Alongside the XSP vertical spread product they\u2019re also going to support a true binary threshold contract. It\u2019s effectively the same as the spread, except that there\u2019s no Plus Zone. I\u2019ve suggested \u201cThe Plus Zone Minus\u201d as the official name of this new offering, but I\u2019m pessimistic.<\/p>\n\n\n\n

This product is simply a Yes\/No contract for questions like \u201cWill XSP close at or above $750?\u201d It\u2019s a little trickier to hedge given the jump payoff, but that\u2019ll get baked into the pricing. Plus, it\u2019s a lot closer to the prediction markets you see on exchanges like Kalshi.<\/p>\n\n\n\n

So then who are these markets for?<\/h3>\n\n\n\n

Let\u2019s work down the list.<\/p>\n\n\n\n