However, Middleton and the Bucks are planning to work toward a new long-term deal, sources told Wojnarowski.
The 27-year-old is eligible to sign a five-year, $190-million max contract with Milwaukee or a four-year, $141-million deal elsewhere.
Middleton's option was for the final season of a five-year, $70-million contract signed during the 2015 offseason. He's coming off his first All-Star campaign, during which he averaged 18.3 points and career highs in rebounds (six) and assists (4.3) per contest.
The Bucks posted an NBA-best 60-22 regular-season record and advanced to the Eastern Conference finals for the first time in 18 years.
Milwaukee has some tough decisions to make. Malcolm Brogdon, Brook Lopez, and Nikola Mirotic are all free agents, and the club has until July 2 to guarantee backup guard George Hill's $18-million salary for 2019-20.