The Securities and Exchange Commission has approved, on an accelerated basis, a Cboe Exchange rule change that lets the exchange list binary options paying out on company performance metrics. The order, Release No. 34-106659 in File No. SR-CBOE-2026-061, is dated Oct. 13 and was published in the Federal Register on Oct. 16 (91 FR 65854). A contract pays a fixed $1 if, say, Nvidia’s reported data center revenue meets the strike, and nothing if it does not.
The change matters because of what sits underneath. Cboe’s existing binary rules cover broad-based indexes and the Cboe Magnificent 10 Index, both of which are prices. The new contracts settle on a number a company discloses to the SEC. That is an event contract, the format prediction markets made familiar, listed on a registered securities exchange under SEC-approved rules. It arrives while Congress’s market-structure bill sits stalled after a 49–50 Senate vote, leaving agencies and exchanges to write the rulebook piece by piece.
1. What counts as a KPI
The rule defines the underlying narrowly. It is not any figure a company mentions on an earnings call.
The Exchange proposes to define the term KPI (or “key performance indicator”) as a key financial or operating metric disclosed by an issuer in its earnings-related filings submitted to the Commission (i.e., Form 8-K, Form 10-Q, or Form 10-K, as applicable).
EXCERPT · SEC Release No. 34-106659, Section III, proposed Rule 4.80
Eligibility is set by name, not by formula. Proposed Rule 4.81(a) lists 23 issuers and the specific metrics Cboe may use for each. Most get diluted earnings per share and total revenue, plus segment lines. Some go further into operating data.
| Issuer | Selected eligible KPIs |
|---|---|
| NVIDIA | Data Center Revenue; Automotive Revenue |
| Tesla | Model 3/Y Production (#); Supercharger Connectors (#); Free Cash Flow |
| Meta Platforms | Family Daily Active People (#); Operating Margin (%) |
| Marathon Digital | Number of Blocks Won; Energized Hashrate; Total Bitcoin Holdings |
| Robinhood | Funded Customers (#); Robinhood Gold Subscribers (#) |
| JPMorgan Chase | Net Interest Income; Provision for Credit Losses |
| Space Exploration Technologies | Earnings per Share: Diluted; Total Revenues |
The crypto overlap is hard to miss. Coinbase, Marathon Digital and Robinhood are on the list, and several Marathon metrics are counted in bitcoin.
2. How a contract settles
Binary KPI options are European-style and cash-settled, with a $1 exercise settlement amount and a contract multiplier of one. A call pays if the reported KPI equals or exceeds the strike; a put pays if it comes in below. Each KPI for each issuer is its own option class, separate from options on the company’s stock.
Expiration is the issuer’s earnings disclosure date. If that date is not yet announced, Cboe lists a placeholder: the first trading day after the filing deadline for the period. Contracts are A.M.-settled for companies that report before the open and P.M.-settled for those that report after the close. Cboe may list series up to 12 months out, with at most two expirations per KPI per issuer.
The settlement value comes from the SEC filing, not the press release, though Cboe says the two are “generally the same.” If the issuer later restates the number, nothing changes: the value reported on expiration day is final. If the KPI is never reported or the filing is delayed, clearing falls to Cboe Clear US, LLC’s alternative procedures, which may pay the option’s last closing price. The filing’s example is $0.76 instead of $1.00. If no reliable closing price exists, the options expire worthless.
The number on expiration day is final. A restatement next quarter does not reopen the bet.
Strikes are scaled so billion-dollar figures fit standard formats: a $45.093 billion net sales figure becomes an at-the-money strike of 45.10. For KPIs above 10, listed strikes must generally sit within 30% of the at-the-money value, which Cboe may peg to the last reported figure, company guidance or analyst consensus.
3. What Amendment No. 1 changed
Cboe filed the original proposal on June 30. Amendment No. 1, filed Oct. 1, replaced it entirely. According to the order’s footnote 7, the amendment:
- clarified rule text, including how Cboe sets the at-the-money value and that a position limit exemption is available only to registered market-makers;
- added representations on the Options Listing Procedures Plan and the OPRA Plan;
- expanded the description of alternative settlement procedures;
- added discussion of trading when the issuer’s stock is halted;
- added information on how investors can find out about the contracts; and
- set a 25,000-contract position limit.
Cboe also stresses that the expiration scope is narrower than for binary index options, which may run out to 36 months.
4. The approval and what it leaves open
The proposal was published for comment on July 15 (91 FR 43418). In Release No. 106196 (91 FR 55918), the Commission extended its review and set Oct. 13 as the date to approve, disapprove or begin proceedings. It acted on that date. The order dates the extension Aug. 26, 2024, apparently a typo for 2026. The order approves the amended rule on an accelerated basis and, in the same document, solicits comment on Amendment No. 1.
The obvious policy question is information: insiders and filing preparers see a KPI before the market does. Cboe’s statement, published verbatim in the order, deals mostly with mechanics. The tools visible in the amended rule are the position limit and the new halt language. The Commission’s own findings, and its stated grounds for acting on an accelerated basis, begin in Section IV of the order.
One more wrinkle: the KPI definition names Forms 8-K, 10-Q and 10-K. The SEC’s pending proposal to let companies file a semiannual Form 10-S instead of quarterly 10-Qs would, if adopted, change the reporting cadence these contracts are built on.
5. What to watch
- Comment file on Amendment No. 1: open at sec.gov under SR-CBOE-2026-061.
- Clearing filing: Cboe says it will submit a separate rule filing to clear the contracts through Cboe Clear US.
- Disclosure document: the Rule 9b-1 options disclosure document for binary KPI options is still pending Commission review.
- First listings: series may open at least one business week before an expiration; Cboe will post finalized expiration dates on its website.
- Oct. 20: the first of three open SEC and CFTC crypto comment dockets closes, per our earlier file.
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