http://en.wikipedia.org/wiki/Major_L...l_transactions
Once all of the options have been used up on a player, a player is considered "out of options" and a player must be placed on and clear waivers prior to being sent down to the minor leagues (there is also the "veterans' consent" rule; see below). Additionally, three years after the date of a player’s first appearance on a major-league roster, he must clear optional waivers (which are revocable) to be optioned even if he has options remaining