The 40-man roster is a list of all players currently reserved by a club at the major league level. At any one time, teams can have a maximum of 40 players on their roster (excluding the 60-day DL). All the players eligible to play in a major league game are on the 25-man roster, but each club can have as many as 15 more players who are either on the 60-day disabled list or are in the minor leagues.
From Opening Day through August 31st, only 25 players are eligible to play at the major league level, but from September 1st through the rest of the regular season, the entire 40-man roster is eligible.
Once a player is drafted, he is bound to the team for either four or five years, depending on his age when drafted. (For those drafted at age 18 or younger, it is five years, for those drafted at age 19 or older it is four years.) After that, he must be placed on the 40-man roster or be exposed to the Rule 5 draft. The time is calculated from when the drafted player signs his contract.
The Rule 5 draft takes place at the Winter Meetings and sees the clubs draft from the pool of exposed players in reverse order of their win-loss record the previous season. Teams that draft a player pay $50,000 to the player’s original team. Once drafted, that player must remain on his new team’s 25-man roster for the entire season or he is sent back to the original team, who would pay $25,000, provided he clears waivers.
After the four year/five year period expires, if the player is added to the 40-man roster then “options” come into play. The major league club now has the ability to move the player between the majors and the minors while keeping him on the 40-man roster without exposing him to the other 29 teams for three seasons. These moves, or optional assignments, can take place any number of times over those three years without the player having to go through waivers or the Rule 5 draft.
After those three seasons a player is said to be “out of options” and, beginning with the next season, he must clear waivers when being sent to the minors.
When a player is optioned to the minors, he can’t be called back up to the major league team for at least 10 days unless another major league player goes on the disabled list. And if the time spent in the minors on optional assignments adds up to less than 20 days in a season, then an option is not used for that year.
A fourth option year can be added to a player if he has exhausted his three option seasons but has less than five full seasons as a professional. A “full season” is defined as 90 days or more on an active roster, but if he is put on the DL after having been active for 60 days, the DL time counts.