Nigel Buys an Option for $1,000 Which Allows Him to Purchase

Nigel buys an option for $1,000 which allows him to purchase a block of shares for $40,000. Which of the following statements is NOT correct?

A) If Nigel allows the option to expire, he has an allowable capital loss of $500.
B) If Nigel sells the option for $700, he has an allowable capital loss of $350.
C) If Nigel purchases the shares, the adjusted cost base of the shares will be $41,000.
D) If Nigel allows the option to expire, the vendor has a taxable capital gain of $500.