Utilizing Derivatives for Portfolio Risk Management

Jackson Financial Advisors is managing a diversified portfolio for a high-net-worth individual. Recently, the client expressed concerns about potential declines in the equity markets and asked Jackson to consider implementing risk management strategies using derivatives.

Describe how derivatives can be utilized in portfolio risk management, specifically focusing on options and futures. In your answer, include examples of how these instruments can be used to hedge against potential losses in the client's equity portfolio.