Assume you calculate the price of an option using the binomial model and get $C=$$$5.$ Then, you look in the market and the option is selling for $$4.$ To arbitrage, you should

buy the option in the market and hedge by selling $h$ shares of the underlying stock $(h$ is the hedge ratio$)$

sell the option in the market and hedge by selling h shares of the underlying stock $($ h is the hedge ratio$)$

buy the option in the market and hedge by buying $h$ shares of the underlying stock $($ h is the hedge ratio$)$

sell the option in the market and hedge by buying h shares of the underlying stock $($ h is the hedge ratio$)$