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HMRC internal manual

Capital Gains Manual

From
HM Revenue & Customs
Updated
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Financial options: Stock exchange traditional options: traded options

Although traditional options and traded options are similar in concept there are a number of important differences.

Traditional option Traded option
   
No market in the options. Investors can only realise a profit by exercising the option and selling the shares. The options can be bought and sold. Investors can realise a profit by selling the option itself.
Options are available for any listed stock. Options are only available for the shares in a small number of large companies.
Options can be created for any number of underlying shares. Options are only available in standard contracts normally for1,000 shares.
More flexibility over exercise and expiry date. Only certain fixed expiry dates and a limited and fixed range of exercise prices are available
The option holder is entitled to any dividend declared during the option period if they buy the shares. No entitlement to dividends declared during the option period.