And if they have so little respect for the screenplay or the writer you'd better head for the nearest exit. But the promise of a possible production is difficult to turn down when there are no other markets available. The Writer's Guild deals with these low-ball option offers and have taken a position on what the basic minimums should be. Even if you are not a Guild member you can use their minimums as a starting point for negotiations for an option. I made a deal where I get paid for my screenplay only when the producer raises the budget.
Some producers raise their budgets.
There are many, many projects pushed by producers which go belly-up. There are so many variables involved, which all have to line up just right, that the Producers face a daunting situation. Normally, a one year option is sold for a negotiated amount of money, and a renewal option is available to the producer for a negotiated additional amount of money. Options can be negotiated for longer or shorter times. The purchase price is also negotiated at this time.