I'm not sure if it's in the option menu, but you can change the setting as follows:
Make sure the Movelist tab is active;
Right-click your mouse in the Movelist window to get the context-sensitive menu;
Under "Default action for adding moves", you have three choices:
Always ask
Always in a new Variation
Always Overwrite
One time when I had made a sufficiently terrible mistake to justify going back and changing my move, I goofed and set it so it makes any redone moves the default, making it impossible to set up variations.
Does anybody know where this setting is in the opt ions menus, or how to reset any settings I've got, other than by reinstalling?