The team is planning to leave its choices open until after the NBA draft on June 26 before making it official. The team has until June 30 to inform Parsons of its decision. However, he is still very much in its plans.
Yahoo! Sports earlier reported that the Rockets plan to decline Parsons' option.
This bit of maneuvering may look unusual on its face because Parsons is scheduled to earn only $964,000 next season, which is a relative bargain after he averaged 16.6 points and 5.5 rebounds in his third season. Parsons may be able to command a salary of more than $10 million next season if he becomes a free agent.
Letting Parsons become a free agent now may help the Rockets long term and control his value on the market. If Parsons becomes a free agent this summer, he will be restricted and the Rockets will be able to match any offer. With the team having such control, the market for Chandler may not be as fierce since opposing teams know the Rockets are likely to match.
If the Rockets execute their option and keep Parsons under his current contract, he would become an unrestricted free agent in 2015, a year when the salary cap is expected to jump and numerous high-profile teams are scheduled to have expansive salary-cap space. Competing for Parsons in that market, especially if he has another strong season, might become more dangerous and costly.
Declining Parsons' option would not have an impact on the Rockets' plans to chase another high-profile player this summer. The Rockets are expected to be active in the trade market, looking either to acquire a star -- they have high interest in Kevin Love if the Minnesota Timberwolves decide to trade him -- or to clear salary-cap space to sign one.
Sources told ESPN.com that the Rockets believe they may be able to trade Jeremy Lin and/or Omer Asik in potential deals for a star player or to offload their contracts for salary-cap space.
Houston is believed to be preparing a run at potential free agent Carmelo Anthony, but would need to work out a sign-and-trade with the New York Knicks or offload other salaries to create cap space to make it possible.
If Parsons becomes a free agent, his cap hold -- which is a slot in the Rockets' salary structure that takes up cap space until he is signed -- would be less than $2 million. But the Rockets would retain his full Larry Bird rights, which would enable them to exceed the salary cap to re-sign him.
It's complicated, but by declining Parsons' option, the Rockets could make another move to acquire a high-earning star player and then sign Parsons by using the Bird rights to exceed the salary cap.
All of these scenarios have played into the team's thinking as it approaches the Parsons' decision.