Which of the following strategies could be used for hedging tail risk?

Using derivatives like put options and credit default swaps is an effective strategy for hedging tail risk because these financial instruments are specifically designed to provide protection against extreme market movements.

Put options allow an investor to sell a stock at a predetermined price, which can help mitigate losses in the event of a significant market downturn. By purchasing put options, investors can insure their equity positions against sharp declines, effectively providing a safety net during adverse market conditions that characterize tail risk scenarios.

Credit default swaps (CDS) function similarly in the context of credit risk. They offer protection against the default of a counterparty by allowing the purchaser to transfer the risk of default to another party. In both cases, the strategic use of these derivatives helps investors limit their potential losses during events that fall outside the normal distribution of expected returns—events that are often referred to as "tail events."

Therefore, leveraging derivatives like put options and credit default swaps aligns perfectly with the goal of hedging tail risk, making this approach the most appropriate choice among the options provided.