An option is an agreement that gives someone (usually a producer or a studio) the exclusive rights to buy something for a set amount of time and a pre-determined price.

Options are common in the film and television industry, because they allow producers to control the rights to a piece of material without spending the full purchase price upfront.

A producer might option the movie rights to a short story for $1,000 for 18 months. She now has 18 months to try and set up the movie at a studio and hire a screenwriter to adapt it into a screenplay, at which point she will execute the option and pay the full purchase price.

At the end of the initial option period, the producer generally has the right to renew the option for another set period of time at a pre-determined price.

Option agreements will contain a buy-out price, the amount the producer can pay the writer to acquire all the necessary rights.

A screenwriter can be on both sides of an option: he can have his screenplay optioned by a producer, or he can option the rights to an existing piece of material he plans to adapt.

Option prices for a book or screenplay can vary wildly, from $1 (often called a “free option”) to thousands of dollars.