Let’s Understand this with the help of an example Investor A has 100 shares of Infosys, 100 shares of Reliance Industries, 100 shares of ITC, 100 shares of Maruti Suzuki. 
The risk here for the investor is he holds a bullish position in those scripts which might not favour him in the future. In case of any major downside in the scripts he hold he will face a loss. To protect this downside risk Investors, Mutual Fund houses and Hedge Funds Use something called as Hedging In case of this example, Investor A is bullish on some of the heavy weights of The Nifty50 Index.

To protect his portfolio or to insure his portfolio he will hold a subsequent short position in some other form. Portfolio Hedging can be done in 2 ways One by having a short position in the Futures and Options Market Second is by having a long position in GoldIn both the cases all the positions work inversely i.e. If one is a bullish position other one is a bearish position and vice versa. But the question stands here is how many options should I have to hedge to my portfolio.