Using Options for Risk Management in a Volatile Stock Investment

As a wealth manager, you are working with a client who has a significant portion of their portfolio invested in a technology company that has recently experienced high volatility due to market conditions. The client is concerned about potential declines in the stock price and has expressed interest in using derivatives for risk management purposes.

Describe how derivatives, specifically options, can be utilized to manage the risk associated with this investment in the technology company. Consider both protective strategies and potential outcomes for the client.