Ellis, who had one year, $11 million left on his contract, will become one of the most coveted free agents on the market this summer.
If Howard cannot achieve his top goal of playing with Chris Paul, teaming up with Ellis may become an option he would strongly consider.
Ellis' goal in signing his original deal was to give him the flexibility to become a free agent in his prime.
The Bucks reportedly had offered Ellis a two-year, $24 million extension earlier this month, but the offer was contingent on him not opting out of the final season of his contract.
Ellis led the Bucks with 19.2 points per game in the regular season, his eighth in the NBA after being drafted by the Warriors 40th overall in 2005.
Information from The Associated Press was used in this report.