SEC Approves Cboe Binary Options on 23 Companies' KPIs as Earnings Event Contracts Reach a Securities Exchange

The Securities and Exchange Commission has cleared Cboe to list yes-or-no options that pay $1 on whether a company's reported figure, such as iPhone sales, clears a set level. They will trade as securities, not CFTC event contracts, with Robinhood lined up as the first broker, but there is no launch date until Cboe's clearing house is approved.

• The SEC on 13 October granted accelerated approval to Cboe Exchange's proposal, as amended on 1 October, to list binary options on key performance indicators (KPIs) reported by 23 companies, including Apple, Nvidia, Tesla, SpaceX and Robinhood Markets
• Each contract pays a fixed $1 or nothing depending on where the KPI in the company's SEC filing lands against the strike, is fully funded, and is capped at 25,000 standard contracts per class, with 100 binary contracts counting as one
• The order classes the contracts as options on a security but "does not foreclose" other markets from structuring KPI products differently, leaving room, SEC Chairman Paul Atkins said, for CFTC jurisdiction
• Kalshi had urged formal proceedings, arguing approval would prejudge open questions on where swaps end and securities begin; the order came four days after the CFTC proposed to define event contracts as swaps
• Cboe says it will not list the options until the SEC approves its clearing house, Cboe Clear U.S., whose registration application was still open for comment on 6 October

The SEC Says Cboe's KPI Contracts Are Options on a Security, and Must Be Approved

The Commission approved the rule change, file SR-CBOE-2026-061, in Release No. 34-106659 dated 13 October, the deadline it had set in August. The accelerated approval covers the proposal as modified by Amendment No. 1, which Cboe filed on 1 October to replace its original 30 June filing.

The products are cash-settled, European-style standardised options. A call pays $1 if the KPI equals or exceeds the strike; a put pays $1 if it falls below. Settlement uses the figure in the company's Form 8-K, 10-Q or 10-K filing with the SEC, and a later restatement does not change a payout already made. Contracts expire on the day the company reports, have a multiplier of one, trade electronically only and must be fully paid for.

New Rule 4.81 names the issuers and more than 100 metrics, among them iPhone net sales at Apple, YouTube ads revenues at Alphabet, data centre revenue at Nvidia, Model 3/Y production at Tesla, and funded customers and Robinhood Gold subscribers at Robinhood Markets. Cboe argues that large, heavily traded issuers make the figures less susceptible to manipulation.

The position limit of 25,000 standard contracts per class is, the order says, the most conservative in Cboe's equity options rules. Positions are not aggregated across a company's KPIs. Cboe says it will apply its existing surveillance and work with the Financial Industry Regulatory Authority (FINRA) on insider-trading checks.

Kalshi Objected, and the SEC Said the Statute Left It No Choice

Kalshi's chief compliance officer, Sudhir Jain, wrote on 5 August that approval would "prematurely resolve" questions in the SEC and Commodity Futures Trading Commission (CFTC) joint request for comment of 18 June on the definitions of swap and security-based swap. Rothera Exchange and Clearing and Paradigm raised related objections; Robinhood and the Equity Markets Association welcomed the filing.

The order answers that the products are options on a security because KPIs move the issuer's share price, that the joint request's comment period has closed, and that once it finds a rule change consistent with the Exchange Act it "must approve" it. It accepts that "similar products with the same underlying KPIs" may be "structured in different ways and be subject to CFTC jurisdiction". Atkins said the order does not address, and does not foreclose, that jurisdiction, and called it "a new spirit of harmonization, innovation, and investor choice" after decades of "turf wars".

Cboe and Robinhood said on 30 September that they planned an October launch subject to approval, with Robinhood as the first retail broker and no fees from either until the end of 2026. But Cboe told the SEC it will not list until the filings of Cboe Clear U.S. (CCUS) are approved, and an SEC notice of 6 October shows the clearing application still open for comment.

The SEC Has Opened a Second Door for Event Contracts

A fixed payout on whether a reported number clears a line is close to what Polymarket has offered on quarterly earnings, and the order all but concedes it by leaving room for the CFTC. What has changed is that the wrapper is now a choice: a security settled on an SEC filing, or a contract on a designated contract market that the CFTC's 9 October proposal would treat as a swap. NYSE Arca and NYSE American published their own binary KPI proposals on 18 September, and the SEC has extended its review of MEMX's securities event contracts to 25 November. Earnings are a long way from sports, and nothing here touches the state enforcement the Sixth Circuit upheld. But Cboe's announcement pointedly cites "the benefits of federal preemption of state securities registration requirements", the kind of federal shield the CFTC-regulated exchanges are still fighting for against state gambling law.

The Protections Are Borrowed, and the Insider Risk Is Real

The order's investor-protection case rests on existing options machinery: full funding, position limits, a disclosure document brokers must deliver before trading, and established insider-trading surveillance. That framework has decades of practice behind it, and it matters because a KPI is known to finance staff, auditors and executives before it is filed; the KPMG employee reportedly facing charges over Polymarket earnings bets shows the risk is real. Two details deserve watching. Robinhood, the launch broker, is also one of the 23 issuers, so its customers will be able to trade on its own subscriber numbers, which the order does not specifically address. And a limit equal to 2.5 million binary contracts per class is generous for a $1 product that Cboe expects retail investors mainly to buy.

Approval Is the Easy Part; Clearing Decides the Launch

Cboe has its rule but not its plumbing. CCUS still needs registration, after which Cboe must file a further rule change to clear through it, so the October launch now depends on approvals no one has dated. The fee waivers point to a race for early liquidity against the NYSE exchanges, MEMX and the prediction markets already listing earnings contracts.

The SEC has given Wall Street a securities-law version of the prediction market, and told the CFTC it can keep its own. Which wrapper retail traders choose will say more about the future of event contracts than either agency's definitions.