Alternatives for Investing in Lincoln National Corp. Stock

Investors interested in Lincoln National Corp. (Symbol: LNC) may find the current market price of $33.25 per share less appealing. Instead of buying at this price, they might consider selling put options. One notable opportunity is the January 2027 put at a $25 strike, which has a current bid of $2.55. Accepting this bid offers a premium that translates into a 10.2% return against a $25 commitment, equating to a 6% annualized rate of return, a metric referred to as the *YieldBoost*.

Selling a put option differs from owning shares. A put seller does not access Lincoln’s upside unless the contract is exercised. The buyer of the option benefits only if exercising the option at the $25 strike offers a better result than selling at the current market price. If the stock doesn’t drop by 24.6%, resulting in an effective purchase price of $22.45 per share (after accounting for the $2.55 premium), the seller’s only profit comes from that collected premium, highlighting the 6% annualized return.

Interestingly, this annualized rate surpasses Lincoln National’s 5.4% dividend yield, based on the present share price. However, purchasing the stock at the market price to collect dividends carries more risk, as the stock would need to decline by 24.65% to reach the $25 strike price.

When discussing dividends, it is essential to recognize their unpredictability, often linked to a company’s profitability. For Lincoln National, reviewing the dividend history chart below is useful for assessing whether the recent dividend is likely to continue, and whether a 5.4% annualized yield is reasonable.

The chart below displays Lincoln National’s trading history over the past twelve months, with highlights indicating where the $25 strike price falls in relation to that history:

This information, combined with an analysis of Lincoln National’s historical volatility—which stands at 41% based on the last 250 trading day closing prices and the current stock price—can help determine whether selling the January 2027 put at $25 represents a favorable risk-reward scenario.

During mid-afternoon trading on Tuesday, the total put volume among S&P 500 components reached 989,148 contracts, while call volume stood at 1.21 million, yielding a put-to-call ratio of 0.82. This figure is notably elevated compared to the long-term median ratio of 0.65, indicating an increased interest in put options relative to call options at present.

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