There are three types of options:
- Team Options give the team the right to invoke the option. There can be only one option year (except in the case of rookie scale contracts).
- Player Options give the player the right to invoke the option. There can be only one option year.
- Player Early Termination Options (ETOs) give the player the right to terminate the contract early. An ETO can't occur prior to the end of fourth season of the contract (which implies that the contract must be for five seasons). An ETO is not allowed in a veteran extension (see question number 58).
A contract may not contain more than one option, either in the same year (such as a player option and a team option in the same year) or in different years. The exception is rookie scale contracts for first round draft picks, which contain a team option before both the third and fourth seasons. No other options are permitted in rookie scale contracts. See question number
47 for more information.
Here's a summary of the differences between an option and an ETO:
- Options can be included in any multiyear contract, but ETOs are allowed only in five-year contracts.
- Options can be held by the player or the team, but ETOs are always held by the player (i.e., there's no such thing as a team Early Termination Option).
- Option years may not have a lower salary than the previous season. ETOs have no such restriction.
- A contract with a player option can be extended (see question number 58) when the option is not exercised. A contract with an ETO may not be extended if the ETO is exercised.
- When determining the amount of a trade bonus (see question number 99), option years are not counted as part of the remaining value of the contract, but years following an ETO are counted.