Enhancing Income: Exploring Lincoln National Corp.’s Options
Investors in Lincoln National Corp. (Symbol: LNC) seeking to increase their income can look beyond the stock’s 5.2% dividend yield by pursuing covered call options.
Shareholders can sell the January 2026 covered call at a $37.50 strike, potentially earning a premium of $2.85. This translates to an impressive annualized return of 8.8% based on the current stock price, which, when combined with the existing dividend yield, could bring the total annualized return to 14%. However, it’s worth noting that should LNC shares rise above $37.50, shareholders would forego any additional gains beyond that point. LNC would need to grow by 9.2% for this scenario to manifest, ultimately resulting in a 17.5% total return, inclusive of dividends, if the stock is called.
It’s important to remember that dividend payouts are not guaranteed and generally mirror the company’s profits. To evaluate the reliability of Lincoln National Corp.’s current 5.2% yield, examine the company’s dividend history chart shared below.
The chart below displays LNC’s trading history over the past twelve months, with the $37.50 strike price marked in red:
The combination of this chart and the stock’s historical volatility can assist investors in deciding if selling the January 2026 covered call at the $37.50 strike presents a favorable risk-to-reward ratio. Based on the calculation of trailing twelve-month volatility (from the last 250 trading days including today’s price of $34.48), Lincoln National Corp. has a volatility of 35%. Investors can explore various call options available on the LNC Stock Options page of StockOptionsChannel.com.
On Tuesday afternoon, trading activity showed a put volume of 1.14 million contracts among S&P 500 components, contrasted with 2.23 million in call volume, resulting in a put-to-call ratio of 0.51. This number is significantly lower than the long-term median ratio of 0.65, indicating a strong preference for call options among traders today.
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Additional Resources:
- Funds Holding QTEK
- Institutional Holders of DWAW
- Funds Holding MBTC
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
