Which of the following describes a short straddle?

A short straddle is an options trading strategy where an investor sells (or writes) both a call option and a put option on the same underlying asset with the same strike price and expiration date. This strategy is employed when the investor anticipates that the underlying asset will not experience significant price movement in either direction, leading to the options expiring worthless.

By selling both a call and a put, the investor collects premiums from the options sold, which is the maximum profit possible from this strategy. However, the risk is potentially unlimited if the price of the underlying asset moves significantly away from the strike price, as the investor may have to fulfill obligations on both the call and put options. This setup captures the idea of generating income in a low-volatility environment, making the correct answer a clear depiction of what constitutes a short straddle.

The other choices describe different options strategies involving various combinations of buying and selling calls and puts, but they do not reflect the specific structure and intention behind a short straddle.