Historically? Stocks rise.
That's nothing controversial. Not trying to be pat. Curt. Or overtly obvious. Fact is, absent recessions, stocks have historically risen over time.
Bears, short sellers and cynics? Not likely to agree. On average, however, bears, short sellers and cynics make for poor investors. So don't take them too seriously.
Still need proof? Firm validation of the long-standing ex-recessionary tendency for equity markets to elevate? Try this chart. Which reveals that, over time and recessions aside (shaded areas signify recessions), stocks rise.

Upon close examination, of course, we find that stocks can -- absent recessions -- move sideways for extended periods. Tirelessly trending up and down for months. Even years. Let's call such periods "EKG Markets." For the tendency to rise and drop ends up resembling the activity of an electrocardiogram, or EKG.
During such EKG periods, investors understandably become discouraged. Collecting little but dividends for the risk they take. For the right investor, however, there are means of enhancing returns throughout these EKG periods. Using options.
Options are, among other things, the stock market's insurance contracts. A means of hedging risk. Generating income. Not to mention a means of speculating on future price action. Today, we'll focus on the safer hedging and insurance utilities that options can provide.
Covered Calls - Selling Call Options on Existing Positions
One popular options trade that can be used in any market, but is especially effective in sideways markets remains the sale of call options against existing portfolio positions.
Hypothetically, say you own 100 shares of Procter & Gamble. And we've grown tired of the stock's sideways trend line over the preceding year. So, we sell one contract for the July 15 80 calls for $2.35. And receive $235 in premium for doing so. Because each options contract is for 100 shares. So you always multiply the price by 100.
On July 15, if the stock has not risen nearly three percent above price at which we sold the contracts, or 83.35 (today's share price + premium received = breakeven, or 81 + 2.35 = 83.35), then the contract expires worthless and we keep the premium. If the stock has gone above the breakeven, then our 100 shares will be called away - at a predetermined and amenable price. The potential downside? When the stock has lifted well above the breakeven and we receive less than we could have if we'd sold at market value. Of course, in that case, we can always buy the contract back, keep our 100 shares and forgo the premium we'd been paid.
Since that process took less than two months, we could hypothetically repeat that transaction up to six times throughout the year. We made a 2.9 percent return on our one-hundred shares. Which equals an annualized return of 17.4 percent. Assuming we never had to buy back the contract or had the shares called away. Moreover, we also keep any dividends paid throughout that period.
Cash Secured Puts - Selling Put Options on Stocks We Admire
During volatile periods featuring trend lines that rise and fall, what feels better in one's portfolio than cash? Which helps to explain why this next tactic can be so attractive. As it enables us to hold cash during a time in which the direction of the market's next move remains uncertain. While bidding on stocks we would like to own at lower prices than those commanded today.
Staying with P&G, say our 100 shares sit at 81. And we'd love to buy more. But wish to do so at a lower price. If the stock dropped another 3.7 percent, we'd buy additional shares. So, we sell the August 19 80 Puts for 2.05 ($205.00). And then we wait.
If the stock rises, trades sideways or even drops slightly over the next 84 days? We simply continue to hold $7,795 in cash (77.95 100 = $7,795) and keep the $205 premium, a 2.6 percent return incurred in less than three months. Equating to a 10.5 percent annualized return.
On the expiration day of August 19, if the stock trades below 77.95 (break even = 80 - 2.05), then we own the stock at whatever the price was. Remember, the stock has to fall by roughly 3.7 percent for P&G to be "put" to us. At a price, of course, that we already determined as attractive for this long-term position.
Both strategies enable you to enhance returns on positions already held (stock or cash) while prospectively selling your stock at a predetermined price (calls) or buying stock at a predetermined price (puts). Either way, these trades can help to mitigate volatility while potentially enhancing your returns.
Both being appreciable benefits in an EKG market.
And that's not all. There remain a variety of other options strategies that can help during the long slogs experienced during EKG markets. Short Straddles. Short Strangles. Long Call Butterflies. Long Call Condors. Long Iron Butterflies. Long Iron Condors. While they may sound like a series of blue movies, these strategies can truly help during those long, sideways slogs. Potentially reducing volatility and enhancing income. And leaving your portfolio in the admirable condition of preserving capital (not to mention nerves) for the inevitable day when the market - having consolidated to its heart's content - bottoms and then elevates for higher highs.