Utilizing Derivatives for Risk Management at Alpha Investments

Alpha Investments is reviewing its portfolio management strategy due to recent market instability. The firm's primary investments are in equities and fixed-income securities, and they have exposure to various industries sensitive to economic cycles. The Chief Risk Officer has proposed utilizing options and futures contracts as part of the risk management strategy to hedge against potential downturns.

Discuss how Alpha Investments could implement derivatives such as options and futures in their risk management strategy. In your response, include specific examples of how these derivatives can be used to hedge specific risks, the advantages and disadvantages of using derivatives, and any considerations Alpha Investments should take into account while implementing this strategy.