Table of Contents
Nasdaq’s MRX options exchange has filed with U.S. regulators for approval of a new class of options on the Nasdaq-100 index that resemble prediction markets, offering a fixed cash payout depending on whether the benchmark finishes above or below a chosen level at expiration.
Fixed Payout Tied to Index Closing Level
In the filing with the Securities and Exchange Commission (SEC), Nasdaq describes the contracts, branded “Outcome-Related Options” (OROs), as European-style, cash-settled options on the Nasdaq-100 and its micro version, XND.
Each contract would pay a fixed $100 if, at expiry, the Nasdaq-100 closes on the chosen side of the strike level, and nothing if it does not, based on the index level set in Nasdaq’s 4:00 p.m. ET closing auction.
What the Price Says About the Odds
Each contract pays either $100 or zero, so its price reflects how likely traders think the payout is, much like a prediction-market contract. According to the filing, prices would run between 1 cent and $1 in one-cent steps, limiting both potential gains and losses to $100 per contract.
The products would trade during regular index options hours, be cleared by the Options Clearing Corporation, and sit in a separate class from existing Nasdaq-100 and XND options, which offer traditional payoffs that change with the size of the index move.
Contract Terms and Position Limits
MRX plans to offer weekly, standard monthly, end-of-month, and long-dated outcome-related options. Up to 12 standard monthly expirations could be listed at any time, with longer-dated series running out as far as five years, and all contracts would be settled and exercised only at expiration.
Traders could hold up to 25,000 outcome-related option contracts on the same side of the market, with that limit calculated separately from standard Nasdaq-100 index options. Positions of 200 contracts or more would have to be reported to the exchange, and any contract that qualifies for the $100 payout at expiry would be exercised automatically.
Nasdaq Cites Existing Binary-Style Products, Requests Accelerated Approval
Nasdaq told the SEC that similar fixed-return or binary-style options are already listed on competing exchanges, including Cboe and NYSE American, and argued that the proposal does not raise new regulatory issues.
The exchange said existing market surveillance, disclosure, and suitability frameworks for options would apply to the new contracts and asked the SEC to grant accelerated approval of the rule change.
