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CIMAPRO19-P03-1 Exam - Topic 6 Question 110 Discussion

A UK manufacturing company has simultaneously:* purchased a put option to sell USD 1million at an exercise price of GBP1.00 = USD1.65* sold a call option that grants the option holder the right to buy USD 1million at a price of GBP1.00 = USD1.61(this option has the same maturity date as the put).Which of the following is a valid explanation for entering into these option positions?
A) The company expects to receive USD 1million from a customer and wishes to offset the cost of the put option by the premium on the call option.
B) The company expects to pay USD 1million to a supplier and wishes to offset the premium from the call option against the cost of the put option.
C) The company expects to receive USD 1million from a customer and wishes to obtain an additional benefit if the USD strengthens beyond GBP 1.00 = USD 1.61.
D) The company expects to pay USD 1million to a supplier and wishes to obtain additional protection against the USD strengthening beyond GBP 1.00 = USD 1.65.

CIMAPRO19-P03-1 Exam - Topic 6 Question 110 Discussion

Actual exam question for CIMA's CIMAPRO19-P03-1 exam
Question #: 110
Topic #: 6
[All CIMAPRO19-P03-1 Questions]

A UK manufacturing company has simultaneously:

* purchased a put option to sell USD 1million at an exercise price of GBP1.00 = USD1.65

* sold a call option that grants the option holder the right to buy USD 1million at a price of GBP1.00 = USD1.61(this option has the same maturity date as the put).

Which of the following is a valid explanation for entering into these option positions?

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Suggested Answer: A

by Jeanice at Jul 20, 2026, 06:54 PM

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