> For the complete documentation index, see [llms.txt](https://docs.cinelaunch.io/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.cinelaunch.io/agreement-types/option-agreement.md).

# Option Agreement

**Option Agreement (Option & Literary Purchase Agreement)**

An option agreement gives a producer the exclusive right, for a set period, to buy the film and TV rights to a property, such as a novel, article, screenplay, life story or existing film. The producer pays a relatively small option fee instead of the full purchase price upfront. This lets the producer develop the project, attach talent and raise financing before committing to the full purchase. If the producer doesn’t exercise the option before it expires, the rights go back to the owner, who keeps the option fee.

The agreement usually has two parts in one document: the option itself, and the purchase agreement that takes effect automatically when the option is exercised. A short-form option and short-form assignment are signed at the same time so they can be recorded with the U.S. Copyright Office. These become the first links in the chain of title.

The key terms are:

* **Option fee.** Often around 10% of the purchase price, though it varies widely, from a nominal amount on spec material to significant money on hot properties. Whether the fee is applicable (credited against the purchase price) or non-applicable is a negotiated point.
* **Option period and extensions.** Commonly 12 to 18 months, with one or more paid extensions. Extension fees are often non-applicable. Automatic extensions for active production or force majeure are common.
* **Purchase price.** Often set as a percentage of the film’s final budget, with a floor and a ceiling. It’s typically paid on exercise of the option, or no later than the start of principal photography.
* **Contingent compensation.** Usually a percentage of the producer’s net profits, plus possible box office bonuses or sequel and series payments.
* **Rights granted and reserved.** The producer typically gets motion picture, television and allied and ancillary rights, including remakes, sequels and merchandising. The author typically keeps print publication rights, and often live stage, radio and audiobook rights, sometimes with a right for the producer to negotiate or match before they’re sold.
* **Credit.** For example, “Based on the novel by…”, with size and placement terms.
* **Consultation and involvement.** The author may be offered a first-draft writing deal, an executive producer credit or set visits.
* **Representations and warranties.** The owner confirms they own the rights, the work is original and there are no conflicting grants.
* **Reversion and turnaround.** If the film isn’t made within a set period after purchase, the rights can revert, sometimes with repayment of the producer’s costs.