As a portfolio manager at a mid-sized asset management firm, you are tasked with reviewing the current market risk exposure of your equity portfolio, which consists of primarily large-cap U.S. stocks and a small allocation to international equities. Market volatility has increased recently due to geopolitical tensions and changing interest rate policies. To manage this market risk effectively, you consider various strategies for hedging your portfolio.

One strategy involves using options to hedge against potential declines in the equity market. Another strategy is to adjust the portfolio's asset allocation, potentially increasing fixed-income investments. Finally, you also consider the use of futures contracts on equity indices to offset potential losses.

Which of the following options best addresses the most effective approach to manage market risk in this scenario?