CG12314 - Options: exercise of an option: person exercising the option

TCGA92/S144 (3)

»Ê¹ÚÌåÓýapp person exercising an option need not be the original grantee. »Ê¹ÚÌåÓýapp person exercising the option may, for example, have purchased the option from the grantee.

»Ê¹ÚÌåÓýapp exercise of an option by the person then entitled to exercise it is not treated as a disposal of the option. If an option is exercised

  • the acquisition of the option by the person then entitled to exercise it and
  • the transaction entered into by that person in exercising his rights under the option

are treated as a single transaction.

If the single transaction is a sale to the person exercising the option, their cost of acquisition is the sum of

  • the consideration given for the call option (see CG12301) by the exerciser, plus
  • the consideration given for the transfer of the asset which was subject to the option.

If the single transaction is a sale by the person exercising the option

  • the consideration for the transfer of the asset which was subject to the put option (see CG12301), is the full consideration received and
  • the consideration given by the exerciser for the acquisition of the put option (see CG12301) is treated as an incidental cost of the disposal.