The SEC just approved a second federal rail for event contracts. Here is what Cboe's KPI binary options are, who objected, and what it changes.
What was approved, in plain terms
The product is a binary KPI option. It is cash-settled and European-style, which means it can only be exercised at expiration, and it is standardised and exchange-listed, which makes it an NMS security under the ordinary rules for listed options. A call pays $1 at expiration if the company's reported KPI is at or above the strike; a put pays $1 if it is below. Settlement uses the figure in the relevant earnings-related SEC filing, a Form 8-K, 10-Q or 10-K. If a company later restates the number, an option that has already settled is not reopened, and the rules set alternative procedures if the KPI is delayed, omitted or unavailable. The options are fully funded under Cboe's margin rules, so a buyer's loss is capped at the premium and a seller must post the full $1.
The eligible KPIs are limited to figures that appear in those filings. Reported examples include earnings per share, revenue, margins and free cash flow, and company-specific metrics such as Apple's iPhone and Services sales, Alphabet's Google Cloud and YouTube advertising revenue, Nvidia's data center revenue, Tesla's quarterly deliveries and Model 3/Y production, Coinbase's total trading volume, transaction revenue, subscription revenue and diluted earnings per share, MARA's bitcoin production, and Robinhood's own Gold subscribers, funded customers, average revenue per user and net revenue. Yogonet's list of the 23 launch companies includes Apple, Alphabet, Amazon, Coinbase, Ford, Intel, Microsoft, Nvidia, Palantir, Robinhood, SpaceX and Tesla. What is explicitly not covered is a price: the Coinbase and MARA contracts settle on reported business metrics, not on the price of bitcoin.
How it compares with a Kalshi contract
Anyone who has traded a Kalshi or Polymarket market will recognise the shape. The differences are in who regulates it, who clears it, and who can distribute it.
| Feature | Cboe binary KPI option | Kalshi event contract |
|---|---|---|
| Regulator | SEC, as a securities option | CFTC, as a designated contract market product |
| Payout | $1 if KPI meets strike, else $0 | $1 if Yes, else $0 |
| Underlying | A number in an SEC earnings filing | Any stated event with a settlement source |
| Exercise | European, at expiration only; position can be traded before | Settles at resolution; position can be sold before |
| Clearing | Cboe Clear U.S., pending SEC registration as a clearing agency | Kalshi's own clearinghouse, CFTC-registered |
| Retail access | Through any broker-dealer that chooses to offer them; Robinhood first | Direct, or through FCM-linked brokers such as Robinhood |
| Fees at launch | Waived by Cboe and Robinhood through 31 December 2026, subject to review | 0.07 × price × (1 − price) per contract for takers |
| State gambling law | Not at issue; securities options have a settled federal framework | Contested in more than a dozen states over sports contracts |
The fee line is the most visible difference for a retail trader. On Kalshi a 100-contract taker order at 50 cents costs $1.75 under the schedule effective 7 July 2026, as we worked through in how Kalshi works. On the Cboe product the same order will cost nothing in exchange or broker fees until the end of the year, assuming the waiver survives regulatory review. A promotional zero is not a structural zero, and Cboe has not published what the contracts will cost in 2027.
Who objected, and what the SEC said back
Two CFTC-regulated venues wrote to the SEC on 5 August 2026 asking it to hold off. Kalshi's letter said it welcomed competition but argued that approval "would prejudge the answers to several questions expressly posed in the Joint Product RFC," the request for comment the SEC and CFTC issued together in June on how event-style products should be classified between the two agencies. Kalshi also pointed out that Cboe Clear U.S. had not yet been registered and that changes to options price reporting, listing and broker rules would be needed. Rothera, the exchange and clearinghouse owned jointly by Robinhood and Susquehanna, wrote under chief executive Thomas Chippas that it "takes no position here on whether the contracts Cboe describes should ultimately be permitted to trade" but that there was no urgency, since comparable contracts were already available on CFTC-regulated exchanges.
The Commission rejected both arguments. It concluded that the binary KPI options are securities options because the underlying metrics are material inputs into the value of the issuers' shares, and it separated the question of whether an exchange may list a product from the question of whether trading may begin, which still requires the clearing and disclosure approvals. Chairman Paul Atkins' statement of 13 October was careful about scope: the order applies "solely to the trading of these specific binary options contracts" on a securities exchange, it does not address similar products on the same KPIs that are structured differently, and it "does not address, and does not foreclose, CFTC jurisdiction" over KPI contracts built for that regime. He described past SEC-CFTC "turf wars" as having frustrated innovation and called the approval "a new spirit of harmonization, innovation, and investor choice."
Robinhood is now on both rails
Robinhood is the only large retail platform with event-contract exposure under both regulators. Its CFTC-side prediction markets run through partner exchanges, Kalshi and Rothera among them, because Robinhood holds no exchange licence of its own. The Cboe deal, announced on 30 September at Robinhood's HOOD Summit in Houston, adds an SEC-side product distributed through its broker-dealer. Steve Quirk, Robinhood's chief brokerage officer, said the earnings contracts "give retail investors another tool to inform their strategies"; JJ Kinahan, Cboe's head of retail expansion and alternative investment products, described them as "a granular way to trade" exposure to corporate metrics.
Two things make that position interesting. First, Robinhood is one of the ten companies the Ohio Casino Control Commission told to stop offering sports event contracts by today, 16 October, in letters we covered in our Ohio piece. The Cboe product does not help it there; Ohio's letters are about sports contracts under state gambling law, and a KPI option on Nvidia revenue is neither. Second, Robinhood's own metrics are on the launch list. A broker distributing a contract that settles on its own reported Gold subscriber count is a novel arrangement, and Cboe's listing rules on halts, position limits and market-maker obligations are the only published guardrails so far.
Why this matters for the prediction-market fight
The state cases against Kalshi and Polymarket turn on one question: whether a sports event contract listed on a CFTC-registered exchange is a swap that federal law shields from state gambling law. The Third Circuit said likely yes in April, the Ninth and Sixth Circuits said no in August and September, and New Jersey's petition is at the Supreme Court. The Cboe approval does not touch any of that. It creates a parallel category of yes-or-no contract whose federal status is not in dispute, because listed securities options have had a settled framework for fifty years, and whose underlying is a corporate filing rather than a game. No attorney general has argued that an option on Apple's Services revenue is a bet.
What it does do is move some of the volume Kalshi was building in corporate-earnings markets onto a venue with a different fee, a different clearinghouse and a broker whose retail base is already larger than any prediction market's. Cboe's chief executive Craig Donohue told a CFTC roundtable in August that some prediction-market products belong under the SEC, and the Commission has now agreed with him for this product. The CFTC's response on 9 October, an interim final rule writing casino bets out of the swap definition and a proposal to write event contracts in, was about the other side of the line. Between the two agencies the map is now: sports and elections stay contested under the CFTC, corporate numbers get an SEC home, and the question of which regime governs a differently structured KPI contract was left open on purpose.
What happens next
Three dates to watch. The first is the clearing-agency decision on Cboe Clear U.S., whose amended application was filed on 1 October and noticed by the SEC on 6 October; without it nothing trades. The second is the third-quarter earnings calendar, which Robinhood has named as its target window and which runs through mid-November for most of the 23 companies. The third is 31 December 2026, when the fee waivers are scheduled to end and the real cost of the product will be published for the first time. We will add the contracts to our cross-venue price comparisons once there is a live order book to compare.
Method and limits
The approval date, release number and rule filing number are from Katten's 15 October note in the National Law Review and from the SEC statement of 13 October; we have read the Chairman's statement but not the full approval order, and the settlement and restatement mechanics above are as summarised by Katten. The company list is from Yogonet's 15 October report and is described there as partial; the KPI examples are from Yogonet, Nextpredict and a 99Bitcoins report syndicated by Yahoo Finance. The comment-letter quotations are as reported by Nextpredict on 14 October, which cites the letters filed under SR-CBOE-2026-061. The fee waiver, the HOOD Summit announcement and the executive quotations are from Markets Media's 30 September report. Nothing here is legal, financial or investment advice, and the contracts described are not yet available to trade.
Frequently asked questions
What did the SEC approve on 13 October 2026?
Cboe's proposed rule change SR-CBOE-2026-061, in Exchange Act Release No. 34-106659, allowing a securities exchange to list binary options on key performance indicators that companies report in their earnings filings. Each option is cash-settled, European-style and pays $1 at expiration if the reported KPI meets the strike, or nothing if it does not.
Which companies and metrics are covered?
Cboe plans up to 100 contracts on 23 companies at launch. Reported examples include Apple iPhone and Services sales, Alphabet's Google Cloud and YouTube advertising revenue, Nvidia data center revenue, Tesla vehicle deliveries, Coinbase trading volume and transaction revenue, MARA bitcoin production, and Robinhood's Gold subscribers, funded customers, average revenue per user and net revenue.
When can people trade them, and where?
Not yet. Trading cannot start until Cboe Clear U.S. is approved as a registered clearing agency and the disclosure documents are effective. Robinhood will be the first retail broker and has said it expects to offer the contracts during the third-quarter earnings season. Cboe and Robinhood both plan to charge no fees on them through the end of 2026.
Why did Kalshi ask the SEC to wait?
In a comment letter dated 5 August 2026 Kalshi argued that approving the Cboe product would prejudge questions the SEC and CFTC had jointly put out for comment in June about which agency should regulate event-style products, and that the clearinghouse was not yet registered. Rothera, the CFTC-regulated exchange owned by Robinhood and Susquehanna, made a similar no-urgency argument. The SEC rejected both.
Does this affect the state fight over Kalshi and Polymarket?
Not directly. The Cboe contracts are securities options on corporate metrics, not sports or election contracts, and they sit under the SEC rather than the CFTC. Chairman Atkins said the order neither addresses nor forecloses CFTC jurisdiction over KPI contracts structured for that regime. The state cases against Kalshi and Polymarket are about sports event contracts and the Commodity Exchange Act.
Related
- Is Kalshi legal in your state? The 50-state tracker
- Is Kalshi legal in Ohio? The $5 million fine fight
- Is Kalshi legal in New Jersey? The Third Circuit ruling and the Supreme Court petition
- Odds converter: turn a cent price into American odds and implied probability
- The CFTC's 9 October swap-definition rules, explained
Sources
- SEC, Statement on the Commission's approval of a proposed rule change to permit the listing of binary options overlying key performance indicators, Chairman Paul S. Atkins, 13 October 2026.
- National Law Review (Katten), SEC approval opens the door to event-based trading in the securities markets, 15 October 2026.
- Nextpredict, SEC approves Cboe KPI contracts over Kalshi, Rothera objections, 14 October 2026, and the comment file for SR-CBOE-2026-061.
- Yogonet, SEC approves Cboe event contracts tied to corporate KPIs ahead of Robinhood debut, 15 October 2026.
- Markets Media, Cboe, Robinhood announce planned launch of KPI contracts, 30 September 2026, and SEC approves listing of KPI binary options, 15 October 2026.
- Yahoo Finance (99Bitcoins), SEC approves binary options on Coinbase and MARA metrics, but not a bet on bitcoin's price, 15 October 2026.
- PYMNTS, Kalshi asks SEC to slow product launches from rival Cboe, 25 August 2026.
- Gambling Insider, SEC clears Cboe corporate options as Kentucky cases face remand, 15 October 2026.
18+ only. This page reports a regulatory approval and public statements. It is not legal, financial, investment or betting advice. If gambling stops being fun, help is available at 1-800-GAMBLER.