3. An investor buys stock for $1 million on July 23, 2017 and on the same day buys a put on the same stock with a strike price of $1 million for $150,000. On December 15, when the stock is worth $1,100,000 the investor sells the put for $25,000. On December 31, the fair market value of the stock is $1,070,000. The put and the stock constitute a straddle.

why is the entire loss on the put option disallowed