ESPN first reported the news.
Watson will play in 2020 making a base salary of $1.17 million, but, entering the 2021 campaign, that number will increase to roughly $17.3MM.
Since being drafted 12th overall three years ago, Watson has made most of the teams that passed on him regret their decision to do so, especially last season when he performed like an MVP candidate.
In 15 starts, Watson led Houston to a 10-5 record and its second playoff appearance since his arrival, completed 67.3 percent of his passes and registered a 26-12 TD-INT ratio. He also ran over, through and around defenders to the tune of 82 carries for 413 yards and seven TDs.
Christian McCaffrey, that year's eighth overall pick, was the first from his class to sign a contract extension earlier this month. In Watson's case, the measuring stick will likely be former 10th overall pick Patrick Mahomes, who hasn't had his option picked up yet though the team is working on that situation.
After having its future questioned throughout the offseason, Houston picking up Watson's option was an important step the team needed to make to ensure fans that it is serious about mapping out his long-term plans.