What is the option period in a 

Real Estate Transaction in the state of Texas?

An Option Period is given to a buyer for specified number of days in which they can cancel the contract and be refunded their earnest money deposit. The buyer pays a non-refundable fee to the seller, called an Option Fee and it typically ranges from $100-200. This demonstrates that you are serious about your intent, pending additional information such as property inspections, and compensates the seller for the time that the building is off the market awaiting your final decision.

What does it mean for the buyer?

You have time to learn more about the home through independent inspections and appraisals, to negotiate repairs and other items in the contract, and to get approved for financing if they are applying for a mortgage.  You are allowed to terminate the contract for any reason without the risk of losing their earnest money.

How long is an option period?

The number of days of an option period can vary from property to property depending on how long you have inspection period is needed.  In the case where the property is very large and may need multiple inspections it's not uncommon to have a longer option period.

What are the cost involved?

The nonrefundable cost is typically 1 percent or less of the sales price. This is typically applied at escrow closing if you move forward with the purchase. If you decided not to purchase the property, the seller keeps the option fee and you are removed from all contractual obligations. 

What to do as you go under-contract and now you're in your option period?

Call your inspector and schedule that inspection of the property.  Your agent will also collect a check from you for that option fee and needs to be delivered to the seller within the first three days of the option period otherwise you'll lose your right to back out for any reason during that option period. Take note, if you want to have some repairs it has to be done  before 5:00 p.m. on the last day of the option period.