What is a Screenplay Option Agreement and Why Do You Need One

After you type “The End” on your screenplay you are thrilled to have accomplished your goal of finishing your screenplay. Shortly after that, you wonder what to do with it next.

Maybe you are a writer director and you plan on going out and trying to make the screenplay into a film next. Maybe you plan on submitting it to screenwriting competitions. Or maybe you want to send it to managers or to producers so that someone will buy your screenplay and get it made. The first step in the process of the screenplay getting sold, is usually the screenplay getting optioned.

A producer will option your screenplay in order to have a specific amount of time to try to find all the money needed to make that screenplay into a feature film, this is called the option period. For the screenwriter this is a great tool because it allows them to usually make a little money off of their screenplay with the hope of making more money if the screenplay gets made into a film. If that option period runs out, then the screenplay goes back to you, the screenwriter, and you get a chance to find another producer or production company that may want to option your screenplay.

The screenplay option agreement will outline all of the details about the deal between the screenwriter and the producer. It is an equally important contract for the screenwriter as it is for the producer.

What Goes Into a Screenplay Option Agreement?

In the screenplay option agreement there will be specific areas that must be stated.

Fee and Option Period

A producer pays the screenwriter an upfront, non-refundable option fee for the exclusive rights to develop and potentially purchase the screenplay (the option period): within a specified period, typically one to two years.

Purchase Price

If the producer decides to move forward with production, they must exercise the option by paying the agreed purchase price, which is separate from the option fee and may include various forms of compensation such as upfront payments, production bonuses, and backend participation.

Development Rights

The agreement outlines the scope of development activities permitted during the option period and specifies the rights that revert to the writer if the option is not exercised. It also details the writer's credit and further compensation for the completed project.  It can be common that the agreement may address the producer's rights to sequels, prequels, remakes, and other derivative works.

The main reason a screenwriter would need a screenplay option agreement is to monetize their work while providing a structured path toward production, with safeguards in place should the project not move forward.

Tyler is seasoned film and media professional with over 20 years of diverse experience, specializing in production management and creative direction, with a rich portfolio spanning music videos, films, and documentaries, and a global network from the US to Sweden. Reach him on his website, LinkedIn, and X, and gain access to his free filmmaking templates when you sign up for his newsletter here.