What does "cleared for the option" mean? Is it any whim on the part of
the pilot in the pattern, like a touch&go?

It means the pilot can land to a full stop, or touch and go, or do a low
approach to the runway ("peek and go?") without advising the controller
which option he will pick. Otherwise, if you are cleard for (say) a
touch and go, you are not cleared to do a full stop landing - you'd have
to tell him you want a full stop and he would have to clear you for that.

Jose
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