First, go to plugin and enable “Control Rig”
after that right-click on your skeletal mesh and chose “Create Control Rig”.
now open that new file, if you right-click on a bone name in new file you can see that function
This is not answering the question at all. OP is asking where is this option on the “Control Space” item in the hierarchy, not on bone items. If you create a new “control space” in the control rig editor and then right click on it you can see there is no option for “Control Space Transform” there
I came up against this problem as well - initially I was using UE5 and then I dropped it back to UE4.26 and got the same problem, and then I dropped back to UE4.25 and now I get the “Control Space Transform” option.
Interestingly, in 4.26 and 5.0 when creating a new control rig asset the engine creates it in the same folder as the skeletal mesh you right click on, but in 4.25 it creates a subfolder.
I guess control rig only really works properly in 4.25?
In 4.26 in the Control Rig Editor, you can change from Forward Solve mode to Setup Mode (upper toolbar, same row as the Compile button).
This will allow you to set the initial transform from any Space.
In Setup Mode, select a Space. Now you can see the Gizmo and you can perform any translation. That will set the Initial and Current Transforms.