SEC clears Cboe to list options that pay $1 or nothing on company KPIs

Cboe Exchange has SEC approval to list options whose payout depends on a financial or operating figure that a company reports to the SEC, not on its share price. The US Securities and Exchange Commission approved the rule change on an accelerated basis in an order dated 13 October 2026.

Cboe filed the proposal on 30 June 2026. Amendment No. 1, filed on 1 October, replaces the original filing in its entirety.

The details

• The product: a binary KPI option is cash-settled and European-style (exercisable only at expiry). It pays an exercise settlement amount, set at $1, if the reported key performance indicator (KPI) meets or exceeds the strike level for a call, or falls below it for a put.
• The source of the figure: the KPI is taken from the issuer’s earnings-related filing, a Form 8-K, 10-Q or 10-K, not from the earnings press release. Cboe sets the KPI and the reporting period when it lists a series.
• If the figure is missing: where an issuer does not report the KPI or delays its filing, settlement follows the rules of the clearing corporation. Contracts may then settle at an alternative amount between $0.01 and $1.00, based on the option’s last closing price.
• Position limit: Amendment No. 1 adds a limit of 25,000 contracts. A proposed exemption is open only to registered market-makers.

Why it matters

Cboe already lists binary options on broad-based indexes and its Cboe Magnificent 10 Index. This approval extends the same all-or-nothing structure to single-company metrics, with the payout fixed by a regulatory filing.

What’s next

Cboe intends to clear the options through Cboe Clear US and will submit a separate rule filing for that. The options disclosure document for binary KPI options is still pending SEC review. The SEC is also taking comment on Amendment No. 1.