(March 3): Nasdaq Inc plans to roll out options contracts that would allow yes-or-no bets on a major stock index, the latest exchange operator to put its own spin on fast-growing prediction markets.
The company wants to list binary options on its flagship Nasdaq 100 Index and the Nasdaq 100 Micro Index, according to a proposed rule change filed with the US Securities and Exchange Commission. The Nasdaq contracts would be priced between one cent and US$1, reflecting the market’s view of an outcome becoming true, the filing said.
It would be Nasdaq’s first foray into products that mirror prediction markets. The so-called Outcome Related Options would let traders take binary positions on whether a specified event happens. Binary options are a simplified version of an options contract in which the payout depends on the outcome of a yes-or-no proposition.
Nasdaq joins other exchange operators moving to list event-focused contracts in the wake of Kalshi and Polymarket. Similar binary options are also frequently traded off-exchange, directly between two parties, typically institutional investors and banks.
Cboe Global Markets Inc is planning to launch its version of event-contracts focused on business and market events, rather than sports. CME Group Inc, meanwhile, is powering a new prediction market-focused consumer app with FanDuel, an online sports-gambling division of Flutter Entertainment Plc.
The prediction-markets industry lists financial contracts tied to sports, politics and pop culture. Unlike event contracts on Kalshi, Polymarket US and CME Group, which are overseen by the Commodity Futures Trading Commission, binary options are regulated by the SEC. Nasdaq’s contracts are pending SEC approval.
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The Nasdaq 100 tracks the fortunes of the largest 100 companies that trade on Nasdaq’s exchange, including Nvidia Corp and Apple Inc. The index is popular among day traders, with options contracts that expire each day accounting for the majority of trading volume. The binary options would add another way for traders to express views on the index’s expected value.
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