CBOE to let investors bet on Wall Street defaults

The Chicago Board Options Exchange is expanding its listed credit-derivatives offering to allow investors to hedge or speculate on a default among five Wall Street broker dealers.

Known as credit-event binary options, they are an alternative to credit derivatives traded over the counter called credit-default swaps, or CDS. The contracts are expected to be popular with investors because they are traded on an exchange, where prices are more transparent than they are in the opaque swaps market.