Cboe Plans Prediction Markets With Partial Payout Structure
Cboe plans to launch prediction market contracts featuring a third payout zone that allows partial returns, expanding beyond traditional binary yes or no structures.
Cboe Global Markets is preparing to introduce a new framework for prediction market contracts that allows traders to receive partial payouts when outcomes fall within a defined range, expanding beyond the traditional binary structure used by most event-based markets.
The exchange operator said the new design will include a third outcome category known as a “payout zone,” in addition to the standard yes or no structure commonly used in prediction markets. Contracts would still settle based on predefined real-world events, but traders could receive partial payouts if the final outcome lands within a specified range rather than meeting a single binary threshold.
Cboe said the structure is intended to provide greater flexibility for event-based trading while maintaining a transparent settlement framework. Traditional prediction markets typically operate using binary contracts priced between $0 and $1 that pay out fully if the specified event occurs and expire worthless if it does not.
Under Cboe’s proposed model, contracts could settle in three ways: a full payout if the primary outcome occurs, no payout if it does not, or a partial payout if the result falls inside the intermediate payout zone.
The exchange said the framework is designed to accommodate events where outcomes naturally occur within ranges rather than discrete yes-or-no scenarios. Examples could include economic indicators, weather measurements or financial thresholds.
Prediction markets have gained increasing attention in financial markets over the past several years as platforms allow participants to trade on outcomes tied to elections, economic releases and geopolitical events. Contracts typically reflect the market’s implied probability that an event will occur, with prices fluctuating as new information becomes available.
The introduction of a partial-payout structure represents one of the first attempts by a major exchange operator to move beyond purely binary event contracts.
Interest in prediction markets has been growing across the financial industry. Exchanges including Nasdaq have recently explored launching binary options tied to stock market indexes, while specialized platforms such as Kalshi and Polymarket