Executing the option realizes the gain! It's just the it realizes it into an illiquid asset whos price is imaginary nonsense. The problem of imaginary prices

Executing the option realizes the gain! It's just the it realizes it into an illiquid asset whos price is imaginary nonsense. The problem of imaginary prices is one of the reasons that we don't tax unrealized gains, but it can still arise when the gain is realized if its realized into something illiquid.