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HMRC internal manual

Capital Gains Manual

HM Revenue & Customs
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Traded options: tax treatment: grantor of option: option closed out


Section 148 applies to both put and call options. As explained in CG55528 the grantor of an option may close out a traded option by buying an equal and opposite option.

The cost of buying the purchased option plus any incidental expenses is treated as an allowable cost of granting the first option. The gain on the grant of the first option will thus be reduced. The grantor does not have to wait until the second option expires before getting relief.