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                                                                   EXHIBIT 10.18


                               WILLIAM LYON HOMES
                             STOCK OPTION AGREEMENT

         THIS STOCK OPTION AGREEMENT (the "AGREEMENT") is made and entered into
as of the date set forth on Exhibit A hereto by and between WILLIAM LYON HOMES,
a Delaware corporation (the "COMPANY"), and the individual set forth on Exhibit
A hereto (the "OPTIONEE").

         A. Pursuant to the William Lyon Homes 2000 Stock Incentive Plan (the
"PLAN"), the Administrator has determined that it is to the advantage and best
interest of the Company to grant to Optionee this option (the "OPTION") to
purchase the number of shares of the Common Stock of the Company (the "SHARES")
set forth on Exhibit A hereto, at the exercise price determined as provided
herein, and in all respects subject to the terms, definitions and provisions of
the Plan, which is incorporated herein by reference.

         B. Unless otherwise defined herein, capitalized terms used in this
Agreement shall have the meanings set forth in the Plan.

         NOW, THEREFORE, in consideration of the mutual agreements contained
herein, the Optionee and the Company hereby agree as follows:

1. Grant and Terms of Stock Option.

         1.1 Grant of Option. The Company hereby grants to the Optionee the
right and option to purchase, subject to the terms and conditions set forth in
the Plan and this Agreement, all or any part of the number of shares of the
Common Stock of the Company set forth on Exhibit A hereto at the purchase price
per share equal to the exercise price per Share set forth on Exhibit A.

         1.2 Vesting and Exercisability. Subject to the provisions of the Plan
and the other provisions of this Agreement, this Option shall vest and become
exercisable with respect to 33.4% of the Shares subject to this Option on the
initial vesting date set forth on Exhibit A hereto (the "INITIAL VESTING DATE").
Thereafter, on each subsequent anniversary of the Initial Vesting Date, this
Option shall become vested and exercisable with respect to an additional 33.3%
of the Shares subject to this Option. In the event of termination of Optionee's
Continuous Status as an Employee, Director or Consultant for any reason, with or
without Cause, including as a result of death or Disability, this Option shall
immediately cease vesting and shall be cancelled to the extent of the number of
Shares as to which this Option has not vested as of the date of termination.

         1.3 Term of Option. No portion of this Option may be exercised more
than ten years from the date of this Agreement. In the event of termination of
Optionee's Continuous Status as an Employee, Director or Consultant, this Option
shall be cancelled as to any unvested Shares as provided in Section 1.2, and
shall terminate and be cancelled with respect to any vested Shares on the
earlier of (i) the expiration of the ten year period set forth in the first
sentence of this Section 1.3 or (ii) 30 days after termination of Optionee's

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Continuous Status as an Employee, Director or Consultant (or 6 months in the
case of termination as a result of Optionee's Disability or death); provided,
however, if Optionee's Continuous Status as an Employee, Director or Consultant
is terminated for Cause, this entire Option shall be cancelled and terminated as
of the date of such termination and shall no longer be exercisable as to any
Shares, whether or not previously vested.

2. Method of Exercise.

         2.1 Delivery of Notice of Exercise. This Option shall be exercisable by
written notice in the form attached hereto as Exhibit B which shall state the
election to exercise this Option, the number of Shares in respect of which this
Option is being exercised, and such other representations and agreements with
respect to such Shares as may be required by the Company pursuant to the
provisions of this Agreement and the Plan. Such written notice shall be signed
by Optionee (or by Optionee's beneficiary or other person entitled under the
Plan to exercise this Option in the event of Optionee's death) and shall be
delivered in person or by certified mail to the Secretary of the Company. The
written notice shall be accompanied by payment of the exercise price. This
Option shall not be deemed exercised until the Company receives such written
notice accompanied by the exercise price and any other applicable terms and
conditions of this Agreement are satisfied. This Option may not be exercised for
a fraction of a Share.

         2.2 Restrictions on Exercise. No Shares will be issued pursuant to the
exercise of this Option unless and until there shall have been full compliance
with all applicable requirements of the Securities Act of 1933, as amended
(whether by registration or satisfaction of exemption conditions), all
Applicable Laws, and all applicable listing requirements of any national
securities exchange or other market system on which the Common Stock is then
listed. As a condition to the exercise of this Option, the Company may require
Optionee to make any representation and warranty to the Company as may be
necessary or appropriate, in the judgment of the Administrator, to comply with
any Applicable Law.

         2.3 Method of Payment. Payment of the exercise price shall be made in
full at the time of exercise in cash or by check payable to the order of the
Company, or, subject in each case to the advance approval of the Administrator
in its sole discretion, by delivery of shares of Common Stock already owned by
Optionee, by delivery of a full recourse promissory note made by Optionee in
favor of the Company or by any combination of the foregoing. Shares of Common
Stock used to satisfy the exercise price of this Option shall be valued at their
Fair Market Value determined on the date of exercise (or if such date is not a
business day, as of the close of the business day immediately preceding such
date). In addition, the Administrator may impose such other conditions in
connection with the delivery of shares of Common Stock in satisfaction of the
exercise price as it deems appropriate in its sole discretion, including without
limitation a requirement that the shares of Common Stock delivered have been
held by the Optionee for a specified period of time. Any promissory note
delivered pursuant to this Section 2.3 shall have terms and provisions
(including, without limitation, those relating to the maturity date, payment
schedule and interest rate) as determined by the Administrator in its sole
discretion, shall be secured by the Shares acquired and shall comply with all
Applicable Laws (including, without limitation, state and federal margin
requirements).


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3. Non-Transferability of Option. This Option may not be transferred in any
manner otherwise than by will or by the laws of descent or distribution or to a
beneficiary designated pursuant to the Plan, and may be exercised during the
lifetime of Optionee only by Optionee. Subject to all of the other terms and
conditions of this Agreement, following the death of Optionee, this Option may,
to the extent it remained unexercised (but vested and exercisable by Optionee in
accordance with its terms) on the date of death, be exercised by Optionee's
beneficiary or other person entitled under the Plan to exercise this Option in
the event of Optionee's death. Notwithstanding the first sentence of this
Section 3, (i) if this Option is a Nonqualified Stock Option, this Option may be
assigned pursuant to a qualified domestic relations order as defined by the
Code, and exercised by the spouse of the Optionee who obtained such Option
pursuant to such qualified domestic relations order, and (ii) this Option may be
assigned, in connection with the Optionee's estate plan, in whole or in part,
during the Optionee's lifetime to one or more members of the Optionee's
immediate family or to a trust established exclusively for one or more of such
immediate family members. Rights under the assigned portion may be exercised by
the person or persons who acquire a proprietary interest in such Option pursuant
to the assignment. The terms applicable to the assigned portion shall be the
same as those in effect for the Option immediately before such assignment and
shall be set forth in such documents issued to the assignee as the Administrator
deems appropriate. For purposes of this Section 3, the term "immediate family"
means an individual's spouse, children, stepchildren, grandchildren and parents.

         3.1 Optionee's Beneficiary Designation Form. Attached to this Agreement
as Exhibit C is a form pursuant to which Optionee may designate a beneficiary,
and if such beneficiary predeceases Optionee, a contingent beneficiary. If
Optionee is married and designates a beneficiary other than Optionee's spouse,
Optionee's spouse must sign the spousal consent form on Exhibit C for such
designation to be effective. Any transfer of Options to a beneficiary shall be
subject to, and in compliance with, the terms and conditions of this Agreement,
the Plan, and all applicable laws.

4. General.

         4.1 Governing Law. This Agreement shall be governed by and construed
under the laws of the state of Delaware applicable to Agreements made and to be
performed entirely in Delaware, without regard to the conflicts of law
provisions of Delaware or any other jurisdiction.

         4.2 Notices. Any notice required or permitted under this Agreement
shall be given in writing by express courier or by postage prepaid, United
States registered or certified mail, return receipt requested, to the address
set forth below or to such other address for a party as that party may designate
by 10 days advance written notice to the other parties. Notice shall be
effective upon the earlier of receipt or 3 days after the mailing of such
notice.

         If to the Company: William Lyon Homes
                            4490 Von Karman Avenue
                            Newport Beach, CA  92660
                            Attention: Wade H. Cable, President and C.O.O.


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         If to Optionee, at the address set forth on Exhibit A hereto.

         4.3 Community Property. Without prejudice to the actual rights of the
spouses as between each other, for all purposes of this Agreement, the Optionee
shall be treated as agent and attorney-in-fact for that interest held or claimed
by his or her spouse with respect to this Option and the parties hereto shall
act in all matters as if the Optionee was the sole owner of this Option. This
appointment is coupled with an interest and is irrevocable.

         4.4 Modifications. This Agreement may be amended, altered or modified
only by a writing signed by each of the parties hereto.

         4.5 Additional Documents. Each party agrees to execute any and all
further documents and writings, and to perform such other actions, which may be
or become reasonably necessary or expedient to be made effective and carry out
this Agreement.

         4.6 No Third-Party Benefits. Except as otherwise expressly provided in
this Agreement, none of the provisions of this Agreement shall be for the
benefit of, or enforceable by, any third-party beneficiary.

         4.7 Successors and Assigns. Except as provided herein to the contrary,
this Agreement shall be binding upon and inure to the benefit of the parties,
their respective successors and permitted assigns.

         4.8 No Assignment. Except as otherwise provided in this Agreement, the
Optionee may not assign any of his, her or its rights under this Agreement
without the prior written consent of the Company, which consent may be withheld
in its sole discretion. The Company shall be permitted to assign its rights or
obligations under this Agreement, but no such assignment shall release the
Company of any obligations pursuant to this Agreement.

         4.9 Severability. The validity, legality or enforceability of the
remainder of this Agreement shall not be affected even if one or more of the
provisions of this Agreement shall be held to be invalid, illegal or
unenforceable in any respect.

         4.10 Equitable Relief. The Optionee acknowledges that, in the event of
a threatened or actual breach of any of the provisions of this Agreement,
damages alone will be an inadequate remedy, and such breach will cause the
Company great, immediate and irreparable injury and damage. Accordingly, the
Optionee agrees that the Company shall be entitled to injunctive and other
equitable relief, and that such relief shall be in addition to, and not in lieu
of, any remedies they may have at law or under this Agreement.

         4.11 Arbitration.

                    4.11.1 General. Any controversy, dispute, or claim between
the parties to this Agreement, including any claim arising out of, in connection
with, or in relation to the formation, interpretation, performance or breach of
this Agreement shall be settled exclusively by arbitration, before a single
arbitrator, in accordance with this section 4.11 and the then most applicable
rules of the American Arbitration Association. Judgment upon any award rendered
by the arbitrator may be entered by any state or federal court having


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jurisdiction thereof. Such arbitration shall be administered by the American
Arbitration Association. Arbitration shall be the exclusive remedy for
determining any such dispute, regardless of its nature. Notwithstanding the
foregoing, either party may in an appropriate matter apply to a court for
provisional relief, including a temporary restraining order or a preliminary
injunction, on the ground that the award to which the applicant may be entitled
in arbitration may be rendered ineffectual without provisional relief. Unless
mutually agreed by the parties otherwise, any arbitration shall take place in
the City of Newport Beach, California.

                    4.11.2 Selection of Arbitrator. In the event the parties are
unable to agree upon an arbitrator, the parties shall select a single arbitrator
from a list of nine arbitrators drawn by the parties at random from a list of
nine persons (which shall be retired judges or corporate or litigation attorneys
experienced in stock options and buy-sell agreements) provided by the office of
the American Arbitration Association having jurisdiction over Newport Beach,
California. If the parties are unable to agree upon an arbitrator from the list
so drawn, then the parties shall each strike names alternately from the list,
with the first to strike being determined by lot. After each party has used four
strikes, the remaining name on the list shall be the arbitrator. If such person
is unable to serve for any reason, the parties shall repeat this process until
an arbitrator is selected.

                    4.11.3 Applicability of Arbitration; Remedial Authority.
This agreement to resolve any disputes by binding arbitration shall extend to
claims against any parent, subsidiary or Affiliate of each party, and, when
acting within such capacity, any officer, director, shareholder, employee or
agent of each party, or of any of the above, and shall apply as well to claims
arising out of state and federal statutes and local ordinances as well as to
claims arising under the common law. In the event of a dispute subject to this
paragraph the parties shall be entitled to reasonable discovery subject to the
discretion of the arbitrator. The remedial authority of the arbitrator (which
shall include the right to grant injunctive or other equitable relief) shall be
the same as, but no greater than, would be the remedial power of a court having
jurisdiction over the parties and their dispute. The arbitrator shall, upon an
appropriate motion, dismiss any claim without an evidentiary hearing if the
party bringing the motion establishes that he or it would be entitled to summary
judgement if the matter had been pursued in court litigation. In the event of a
conflict between the applicable rules of the American Arbitration Association
and these procedures, the provisions of these procedures shall govern.

                    4.11.4 Fees and Costs. Any filing or administrative fees
shall be borne initially by the party requesting arbitration. The Company shall
be responsible for the costs and fees of the arbitration, unless the Optionee
wishes to contribute (up to 50%) of the costs and fees of the arbitration.
Notwithstanding the foregoing, the prevailing party in such arbitration, as
determined by the arbitrator, and in any enforcement or other court proceedings,
shall be entitled, to the extent permitted by law, to reimbursement from the
other party for all of the prevailing party's costs (including but not limited
to the arbitrator's compensation), expenses, and attorneys' fees.

                    4.11.5 Award Final and Binding. The arbitrator shall render
an award and written opinion, and the award shall be final and binding upon the
parties. If any of the provisions of this paragraph, or of this Agreement, are
determined to be unlawful or otherwise unenforceable, in whole or in part, such
determination shall not affect the validity of the remainder of this Agreement,
and this Agreement shall be reformed to the extent necessary to carry out its
provisions to the greatest extent possible and to insure that the resolution of
all conflicts between the parties, including those arising out of statutory
claims,


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shall be resolved by neutral, binding arbitration. If a court should find that
the arbitration provisions of this Agreement are not absolutely binding, then
the parties intend any arbitration decision and award to be fully admissible in
evidence in any subsequent action, given great weight by any finder of fact, and
treated as determinative to the maximum extent permitted by law.

         4.12 Headings. The section headings in this Agreement are inserted only
as a matter of convenience, and in no way define, limit, extend or interpret the
scope of this Agreement or of any particular section.

         4.13 Number and Gender. Throughout this Agreement, as the context may
require, (a) the masculine gender includes the feminine and the neuter gender
includes the masculine and the feminine; (b) the singular tense and number
includes the plural, and the plural tense and number includes the singular; (c)
the past tense includes the present, and the present tense includes the past;
(d) references to parties, sections, paragraphs and exhibits mean the parties,
sections, paragraphs and exhibits of and to this Agreement; and (e) periods of
days, weeks or month mean calendar days, weeks or months.

         4.14 Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.

         4.15 Complete Agreement. This Agreement and the Plan constitute the
parties' entire agreement with respect to the subject matter hereof and
supersede all agreements, representations, warranties, statements, promises and
understandings, whether oral or written, with respect to the subject matter
hereof.

                            [SIGNATURE PAGE FOLLOWS]


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                            [COMPANY SIGNATURE PAGE]

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first set forth herein above.

                                        WILLIAM LYON HOMES


                                        By:
                                            ------------------------------------
                                            William Lyon,
                                            Chairman and C.E.O.


                                        By:
                                            ------------------------------------
                                            Wade H. Cable,
                                            President and C.O.O.


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