A short straddle is created using two options. For each option in the short straddle above, indicate whether it is a put or a call, whether it is bought or sold, and what its strike price is. What is the maximum possible loss on this short straddle? What is the maximum possible loss on a real short straddle?

3b.What is the sum of the premiums of the options you identified in part (a)?

Explain.

3c.Why would someone enter into a short straddle?

Explain carefully.

Explain your answer to all of the above questions.