If investors are of the view that market will go down or bearish but want to protect against an unexpected rise in the price of the stock.
Suppose XYZ Ltd is trading at Rs 4457 in January. An investor Mr. A buys a Rs 4500 Call Option for Rs 100 while shorting the stock at Rs 4457.
The Net credit of investor is Rs 4357 (Rs 4457- Rs 100).
Strategy: Short Stock + Buy Call Option
Risk is Limited Maximum Risk(Rs 143) = Call strike Price (Rs 4500)- Stock Price (4457) +100.
Rewards= Maximum is stock price-call Premium.