Rockets pick up Reed Sheppard’s $14.04 million option for 2027-28, setting up an extension window next summer

The Houston Rockets have exercised their fourth-year option on Reed Sheppard’s rookie-scale contract, the team announced Friday. The decision guarantees Sheppard $14.04 million for the 2027-28 season.

@MemorialHermann Roster Update: The Rockets today announced they exercised their fourth-year option for guard Reed Sheppard.

More info here: https://t.co/8FqgpnMm5k pic.twitter.com/381CE9iKuy

— Houston Rockets (@HoustonRockets) October 30, 2026

Sheppard, 22, was the third pick in the 2024 draft out of Kentucky. He is earning $11.11 million this season. After 2027-28 he would be a restricted free agent, but Houston can sign him to a rookie-scale extension next summer to avoid that.

A slow start, but an easy call

Sheppard played a small role as a rookie. With Fred VanVleet out for all of 2025-26 with a torn ACL, he played in all 82 games last season, averaged 13.5 points, 3.4 assists and 2.9 rebounds in 26.2 minutes, shot 39.4% from three and finished sixth in Sixth Man of the Year voting.

This season has started more slowly. VanVleet is back and Houston added Marcus Smart, and before the season Ime Udoka talked up his bigger role as a playmaker. Through four games Sheppard is averaging 10.5 points and 4.8 assists in 23.3 minutes, with at least four assists in every game, but he is shooting 28.1% from three. He missed Friday’s game with low back soreness, as did Alperen Sengun, and the Rockets lost for the first time this season, 116-111 in Dallas. Houston is now 5-1.

What the decision means for the cap

• 2026-27: $11.11 million (already guaranteed)
• 2027-28: $14.04 million (now guaranteed)
• Summer 2027: eligible for a rookie-scale extension
• Summer 2028: restricted free agent if he is not extended

Houston has a history of keeping its young core together and signed Amen Thompson to a rookie-scale extension before this season. That makes Sheppard one of the likeliest 2024 first-round picks to get an extension next summer, and a bounce-back season as a shooter would raise the price.

Teams have until Monday, Nov. 2, to decide their rookie-scale options. Minnesota also made its calls Friday, declining Cody Williams’ option while keeping Terrence Shannon Jr. and Joan Beringer, and the full list is in our running tracker of option decisions.