The U.S. Securities and Exchange Commission has approved the listing of binary options contracts linked to key performance indicators of 23 publicly traded companies, opening a new trading avenue for investors tracking crypto-related business metrics.
The approved metrics include trading volume at crypto exchange Coinbase Global (COIN), customer count and revenue at Robinhood Markets (HOOD), and bitcoin production at mining firm MARA Holdings (MARA). SEC Chairman Paul Atkins approved a rule change filed by Cboe Global Markets on October 13.
How Binary Options Work
A binary option is a straightforward options contract that allows traders to bet on a yes-or-no outcome. For example, traders could wager on whether Coinbase's trading volume will exceed a specified threshold by a set expiration date.
The approved contracts are cash-settled and European-style, meaning they can only be exercised at expiration. They will settle based on figures published in companies' SEC filings rather than earnings presentation data.
Timeline and Implementation
Cboe plans to list the contracts this month. Robinhood is expected to be the first brokerage to offer them to retail investors. Trading cannot begin until Cboe Clear U.S., the clearing house, receives provisional registration. A separate application for this registration is currently pending.
Regulatory Framework
The SEC approval does not affect similar contracts overseen by the Commodity Futures Trading Commission, such as those available on prediction market platforms. SEC Chairman Atkins noted that the approval reflects reduced agency friction and aims to support investor choice and innovation.
