Highly-rated Real Betis midfielder Dani Ceballos signed a contract extension with the La Liga club.

Real Madrid target Ceballos was set to become a free agent at the end of the season but Betis announced a new deal on Friday (AEDT), seeing the 19 year-old remain in Seville until at least 2020.

A buyout clause between ‎$18-21 million has reportedly been included in his new contract.

Madrid had been monitoring Ceballos after he played a key role in Spain's successful Under-19 European Championship campaign in July.

Ceballos has appeared in six of Betis's seven league fixtures this season, three of those as a starter.