SEC approves Cboe binary options tied to corporate KPIs

The U.S. Securities and Exchange Commission (SEC) has authorized Cboe to list binary options tied to the key performance indicators (KPIs) of 23 publicly traded American companies. Unlike traditional options that track stock prices, these binary contracts function on a yes/no basis, paying a fixed amount if a specific metric reaches a predetermined threshold.

The new instruments cover over 100 KPIs, including revenue, earnings per share, production levels, and customer counts. Notable companies included in this rollout are Coinbase Global, Robinhood Markets, and MARA Holdings. For instance, contracts for Coinbase focus on platform trading volume, Robinhood on customer numbers and revenue, and MARA Holdings on Bitcoin production.

While this provides a new way to hedge or speculate on fundamental corporate performance rather than just market price, the binary structure carries significant risk, as investors can lose their entire premium if the condition is not met. The regulatory landscape remains complex, as different contract structures may fall under the jurisdiction of the Commodity Futures Trading Commission (CFTC).