Not sure I understand you correctly. Do you mean you paid 50c...

Not sure I understand you correctly. Do you mean you paid 50c for the option, then paid exercise price of another 50c (taking total to $1.00)? Then sell at 98c.
That would be a loss. Your cost basis is the cost of the option plus the exercise price.

The loss thing is really useful if you have a gain to offset it against. Kind of like a consolation prize, you lost X but at least you don't have to pay as much CGT on Y.

*But I stress, I am not an accountant. Going off advice I've received in the past and what I've read on the ATO site.