Mutual Option

Definition

A mutual option is an optional year at the end of a contract. In order for the optional year to become guaranteed, both parties must agree to exercise the option.

Mutual options are very rarely exercised. If a player enjoys a strong season, the club will often exercise its half of the option in the hope of retaining the player on a one-year deal. However, the player, fresh off a high-quality performance, will likely wish to test the open market in search of a larger guarantee on a one-year or a multi-year contract. Likewise, a player whose stock is down might exercise his half of the option rather than test free agency, but his club may no longer view him as worth that salary.