A short straddle is a straddle that is constructed by selling two options: one put option and one call option. In other words, it is the simultaneous sale of a call and a put (combination of a short call and a short put) on the same underlying stock and with same strike price and expiration month.

Because a short straddle involves short calls, the maximum loss is unlimited. As the underlying price increases beyond the strike price (upward movement), losses accumulate and so on and on.