What is a player option in Major League Baseball?

Answer 1

'Player Option' is a term for a clause written into a player's contract that allows the player to extend the length of the contract for one year at a predetermined salary.

If the player decides not to extend the contract, or 'pickup the option', the contract ends and the player becomes a free agent and can negotiate a new contract with any team.

Just like a player option, contracts may also contain a 'team option'. This is a clause written into a contract similar to the player option except the team gets to decide whether they would like to extend the player's contract by one year for a predetermined salary.