Key points
- The New York Stock Exchange is preparing to launch binary options on major technology stocks.
- The new contract will provide a fixed return based on the outcome.
- Options tied to earnings reports still require approval from the U.S. Securities and Exchange Commission.
The New York Stock Exchange is preparing to launch "all-or-nothing" stock options in response to traditional financial institutions' reactions to the rapid expansion of prediction markets and growing demand for outcome-based trading.
According to Reuters, the New York Stock Exchange expects its binary outcome options to begin trading within days after the October 27 announcement, initially covering 12 securities, including the SPDR S&P 500 ETF Trust.
NYSE brings all-or-nothing trading to NVIDIA and Tesla
For example, if NVIDIA's closing price on the expiration date is above a specific price, the contract may pay a fixed amount; if the condition is not met, the contract expires worthless.
The NYSE's ambitions extend beyond stock prices.
According to a separate proposal submitted to the U.S. Securities and Exchange Commission, the exchange aims to launch contracts directly tied to company operating metrics, including quarterly revenue, earnings per share, cloud business sales, and vehicle production.
These key performance indicator (KPI) options will settle between $1 and $0 based on whether the reported data meets the specified threshold.
This concept provides an alternative way to trade earnings announcements without fully relying on the stock price's reaction after the report.
However, NYSE’s KPI contracts still require SEC approval. Competitor Cboe has already received authorization for similar products, intensifying competition among established exchanges.
Kalshi's $65 billion volume shows growing demand
As the NYSE expands, prediction markets are attracting unprecedented trading activity.
According to data released on October 28, Kalshi's trading volume since the beginning of October has reached approximately $65 billion, while Polymarket US has reached approximately $10 billion.
Both platforms broke their monthly records before the end of October.
This surge reflects growing market interest in contracts covering sports events, political events, economic indicators, and financial asset prices.
Traditional brokerage firms also benefit from this.
Robinhood forecasted market revenue of $173 million for the third quarter, surpassing its $120 million in cryptocurrency trading revenue.
The company demonstrated the commercial potential of this industry in the second quarter, when revenue from event contracts was approximately 21% higher than revenue from traditional stock trading.
Growth has also expanded beyond sporting events.
Robinhood recently categorized Bitcoin and gold as growing assets, indicating market demand for simple contracts tied to financial markets.
The products planned by the NYSE will bring similar outcome-based trading into the mature securities options ecosystem.
SEC regulation distinguishes the NYSE from Kalshi and Polymarket
Although the payment structures are similar, the options proposed by the NYSE and traditional prediction market contracts are subject to different regulatory frameworks.
Securities options on the NYSE are regulated by the SEC, while federal regulatory event derivatives on platforms like Kalshi are regulated by the Commodity Futures Trading Commission.
This distinction is important because contract design, liquidation requirements, and client protection measures may vary depending on the regulatory authority.
As Coinpaper’s regulatory comparison explains, products offering similar economic outcomes may still face significantly different legal requirements.
Author
Ethan Mercer is a financial journalist covering cryptocurrency, stocks, and the global economy. He studied economics and finance before transitioning to market reporting, with a particular focus on Bitcoin, stocks, monetary policy, and investor sentiment. His work emphasizes explaining daily market fluctuations and the broader trends behind them.