The SEC has just banned short selling in Citigroup stock. You do not believe it would be either legally or morally wrong to get around this restriction by trading in the firms options. How could you create a synthetic short sale?

1. For each share you wish to short, buy a call option, write a put option with the same exercise price X, and invest X/(1+r)^t dollars in a risk free asset.

2. For each share you wish to short, buy the underlying stock, buy a put option with an exercise price of X, and borrow X/(1+r)^t dollars at the risk free asset.

3. For each share you wish to short, buy the underlying stock, write a call option with an exercise price of X, and borrow X/(1+r)^t dollars at the risk free asset.

4. For each share you wish to short, buy a put option, write a call option with the same exercise price X, and borrow X/(1+r)^t dollars in a risk free asset.