Options
When producers option a script, they are purchasing the right to buy certain rights to intellectual property. A typical option fee is 10% of the cost of the rights, should the producers manage to secure full financing for their project and have it "greenlit". Because few projects actually manage to be greenlit, options allow producers to reduce their loss in case a project does not come to fruition. Should the project be greenlit, an option provides a legally-binding guarantee to purchase the film rights.
The contract for an option will specify the length of time it is valid for. If the producer cannot have their project greenlit in the specified window of time (e.g. two years), the option will expire. The rights holder can then put the previously-optioned rights up for sale again. Or, the contract may allow the producer to renew the option for a certain price.
Read more about this topic: Film Rights