3. (34 points) You are working on a structured products desk. A salesperson would like you to quote a price on a product called "straddle", where the underlying is the S&P 500 Index. Denote the day t level of the S&P 500 Index by St. The straddle pays Fr USD at the expiry date T, where: (1000 x max(St - K0) STOK Fr=0 Sy=K 1000 x max(K - S7,0) Sz