Personally I think HO will consider Option 2. That you are an employee of your own company.
Also, if absences are < 180 days, it looks like HO is not particular about reasons for absences - as I read from other posts.

Well!!... If the Tier 1 applicant is a Director of his Limited Company, He is employed as a director and would be receiving his salary. And so, any leave he takes would be a paid leave. Is it not?

Hi, I have read the sticky & the pdf of calculating continuous period. I am on Tier 1 General and director of a Limited Company. In short periods I was a permanent employee of couple of companies but I continued my Limited Company. I paid a salary to myself as well all the time. Now - For the pe...