This insurance stock is performing admirably. How to ride momentum with minimal risk

MetLife (MET) is well positioned in the life insurance and benefits sector, reflecting momentum that the broader market has not yet fully factored in.

Backed by scale, brand equity, and an experienced leadership team, MetLife is firing on all cylinders.

• Premium & Sales Growth: In Q1, MetLife’s core premiums and expenses grew 10%, driven largely by international and domestic demand: Asia jumped 22%, Latin America 20%, while US Group Benefits gained 15%.
• Unlocking Talent with AI: While many investors focus on AI companies, they may overlook how AI and technological innovation can help old economy businesses. MetLife is poised to lead the industry in margin expansion (20-25 bps annually) by keeping cost growth below revenue growth.
• Profitability: The consensus estimates EPS growth of about 25% over the next two years, from $9.94 expected in FY2026 to $12.40 in FY2028. About 5% of forecast EPS growth is expected from buybacks (just under $1.2 billion left in the existing buyback program). Recent strong sales, good team biographies, and rising stock markets are fueling other investments.
• ROE and Cash Management: MetLife’s ROE ratio of 17.2% is at the lower end of the target range of 15–17%.

Given MetLife’s strong fundamental headwinds and a clear path to EPS upside, I like the risk reversal of the September 77.5/87.5/92.5 call spread (below), which is set to shoot to the upside, or buy the stock near the ~$78 long-term average.

It allows investors to capture MetLife’s upward momentum while mitigating the risk of an immediate downside after the stock’s recent impressive rally and reducing the impact of “theta” (aka “decay”).

• Defined Risk, Gained Reward: By buying a put call, you get exposure to the upside of MetLife. By simultaneously selling a high-strike call and a low-strike call, you collect a premium that lowers your net cost (debit), reducing your spread.
• Reducing Volatility: While rising equity markets and strong investment returns make MetLife stock strong, selling the outside strike helps offset the cost of implied volatility. Note, too, that the September expiration is profitable (the company is expected to report on August 6) – after which options premiums tend to fall sharply, something sometimes called the post-catalyst “vol crush”.
• EPS times: Picking a September expiration not only captures the upcoming quarterly earnings reports, but acknowledges that the market has recently fluctuated, and captures much of September, which has also historically seen above-average volatility.

Trade Management: If MetLife stock goes up, take advantage of the opportunity to “make money” (ie, close) short-term, and possibly issue a debit call on the spread (ie on higher strikes), or up or out (on time).