Option Buyouts

[JNichols42887]

I saw this question in Larry Coon's FAQ:

There is one other type of buyout described in the CBA. When a contract contains an option year, a buyout amount for the option year can be written into the contract. The buyout amount may be up to 50% of the salary for the option year, and is payable with the exercise of an ETO or the non-exercise of an option.

I'm confused as to what this is saying. Is it saying that if the team or player chooses not to extend the contract for one more year (either through exercising the ETO or declining an option), they still must pay some portion of the option year (i.e. the "buyout amount")?

[answerthink]

Contracts that contain an option or an ETO may provide for an Option Buy-Out Amount, which is payable to a player in connection with either the exercise of an ETO or the non-exercise of an option. The amount can’t exceed 50% of the salary called for in the year following the option or ETO.