The option fee in a Texas contract is:

A is incorrect because option fees are non-refundable consideration paid for the exclusive right to purchase, unlike earnest money which may be refundable under certain conditions. This misconception often comes from confusing option fees with earnest money deposits.

B is incorrect because while the option fee may be credited to the purchase price, it's not always credited. This option fails to acknowledge the non-refundable nature of the option fee, which is a key characteristic that distinguishes it from earnest money.

D is incorrect because option fees are not typically held in escrow until closing. The option fee is generally paid directly to the seller and becomes their consideration for granting the option right, with credit applied only if the buyer exercises the option.