Married With Puts

So let’s say you want to do something bearish, and are perplexed a bit by this maze of confusing new rules.

What about a good old married put, as jkw reminds me in the comments yesterday?

A married put involves simultaneously buying puts and stock in equal quantity. Which is a synthetic call when you place the trade, certainly a bullish play at the time.

So how is this bearish?

Well, then you go sell your long stock out. Or as much long stock out as you want. And now voila, you have created a bearish postion.

Is it legal?

Seems like it is. I mean the position was bullish when you entered it. And then last I checked you can sell stock long. So not sure I see the flaw in this unless the Federales mandate you always need a long DELTA.

The issue I suppose is that you are not allowed to actually exercise the puts when they expire. Or ever exercise them for that matter (unless you own stock). You can probably roll the puts though if the net of the roll is bullish for you. And you can also just sell the puts. Or you can take your chances the rule will be clarified or eliminated by the time October expiration rolls around.