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I have a question about how to interpret the state of an entangled photon

H = horisontal, V = vertical polarization

The global state is |Phi> = (|H>|V> + |V>|H>)/sqrt2.

By density operator formalism:

rho = |Phi><Phi|

= (1/2) ( |H>|V><H|<V| + |H>|V><V|<H| + |V>|H><H|<V| + |V>|H><V|<H| ).

in order to find the state on the right side, trace out the left side :

rho_right = Tr_left(rho) = (1/2) (|H><H|+|V><V|),

How should this state be interpreted? 1) as a photon EITHER in H OR V, or 2) a mixed state (superposition) containing components of both the left and the right side.

This would help me to understand this paper:

http://arxiv.org/abs/1301.1673