Six Things to Know About Cboe’s Binary KPI Options

The Chicago Board of Trade Building is located some 1,520 miles from Las Vegas. But today, the two may feel just a little bit closer.

Cboe Global Markets, which has its active trading floor in the building, won SEC approval on October 13 to list binary options tied to specific performance metrics at 23 companies, including Apple, Tesla, and Alphabet. Each contract pays $1 or nothing, depending on whether a company’s reported performance metric meets a specified threshold. Cboe announced the new options at the annual convention of Robinhood, which will be the first retail broker to offer them, launching “later this month.”

Here are six more things to know about Cboe’s KPI options.

1. The options go far beyond earnings per share.

Cboe’s Day 1 product listings will include more than 100 metrics. For most companies—which include retail favorites like Amazon, Coinbase, Meta, and Disney—there are options on earnings per share (EPS) and revenue, plus a few numbers analysts obsess over: Apple’s iPhone net sales in dollars, for instance, or Tesla’s Supercharger connectors. For MARA Holdings, it’s bitcoins mined, and for Target, food and beverage sales.

2. Cboe sold it as a hedging strategy.

Cboe has highlighted at least two benefits of KPI option trades. First, they can act as a hedge. An investor concerned that a quarterly performance metric will fall short of expectations could use a binary option to hedge that exposure without selling the underlying stock Second, for investors and analysts with a strong view on one number, there’s now a way to trade on it directly. Cboe’s Rob Hocking notes that a company can exceed its quarterly performance targets and still see its stock price decline because if its forward guidance, leaving a trader who called the quarter correctly holding a losing stock position.

3. The SEC treated them as securities options.

As Katten explains, the SEC concluded that these are securities options because the underlying metrics feed into the value of the issuers’ securities. Every KPI must come from an earnings-related SEC filing, such as a Form 8-K, 10-Q, or 10-K. The contracts will trade under existing exchange rules on customer accounts, margin, trading halts, market makers, order types, and position limits.

4. Other versions may still fall under the CFTC’s purview.

SEC Chair Paul Atkins said the approval does not foreclose CFTC jurisdiction over contracts built on the same metrics but structured differently. Kalshi, which runs a CFTC-regulated prediction market, had argued in a comment letter that approval would prejudge open questions about the line between swaps and securities, and asked the SEC to institute formal proceedings.

5. Beware of insider trading risk.

A binary option on iPhone net sales turns on a single figure, and someone in the finance department may know that figure well before it’s filed. That makes these contracts an unusually direct way to trade on material nonpublic information. Cboe has said existing insider trading restrictions and surveillance procedures will apply. It’s a good bet (so to speak) that compliance teams at the 23 companies will be mentioning this in their next trading-window reminder.

6. Cboe has one more regulatory hurdle.

Trading can’t begin until Cboe Clear U.S., the exchange’s in-house clearinghouse responsible for ensuring trades settle, receives temporary SEC registration. Cboe applied for the registration alongside its September 30 announcement with Robinhood, and both firms plan to waive fees through year-end. Cboe has not set a launch date beyond “this month.”

For public companies, these new options mean that individual performance metrics could become tradable events in their own right. That creates another reason for legal, compliance and financial reporting teams to pay close attention to how sensitive information is handled ahead of earnings announcements. As the market for event-based contract expands, companies may need to revisit whether their insider-trading policies and information controls adequately address these new instruments. The bottom line: When investors can trade on a single number, protecting that number before it becomes public matters more than ever.

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