Altimeters should be set on either QNH or standard until passing Transition Altitude or Transition Level. The reason if you (climbing) are cleared to a FL, then your clearance is changed back to an altitude, you will not have to reset your altimeter. Worst case is you forget to reset it. Same for a descent clearance.
So, option 2
Oz
Last edited by oz in dxb; 8th February 2011 at 12:17.
Reason: Additional info