Every offseason, certain players become free agents and go on to sign contracts with new teams.
In Major League Baseball, the market is already moving, as certain players have already signed contracts with their old teams or departed for new teams.
Often times, a contract will include what is called an "option." But what exactly is an "option" in a contract? What does it mean?
What is a contract option and how does it work?
Options are placed in contracts very frequently which allows some flexibility with said contract.
For context, there are certain types of options.
Often times, contracts can include opt-out clauses. This means a player can opt out of his deal after a certain point, even before the contract actually expires.
For example, if Blake Snell were to sign a six-year deal with the San Francisco Giants and an opt-out clause is placed in the contract between years three and four, Snell could opt out and become a free agent again after just three years.
There can also be player and team options structured into contracts. Last offseason, Justin Turner signed with the Boston Red Sox for one year. The deal included a player option. Turner did not exercise that option and ultimately became a free agent again.
However, had he exercised that option, he would be under contract with the Red Sox for 2024.
As far as team options go, the process is relatively the same. Sonny Gray recently signed a three-year deal with the St. Louis Cardinals, which contains a club option for 2027. Technically speaking, the contract will last him through the 2026 season. But if the Cardinals exercise the option, Gray will be back in St. Louis for 2027.
Some contracts even have both club and player options. After signing with the Red Sox in 2022, James Paxton had a player option for 2023, while the Red Sox had a club option. Because Paxton missed the 2022 season, Boston declined the club option, but Paxton exercised his option and remained with the Red Sox for 2023.
Mutual options are an interesting concept. For mutual options to be exercised, the club and the player must both exercise their ends of the option. If one side declines, then the player becomes a free agent. Mutual options are not often exercised.
Finally, there are vesting options. These options are based on playing time incentives. It is only exercised if a player reaches their performance incentive threshold. If that threshold is not met, the option turns into a club option.
