This insurance stock is on an impressive run. How to ride the momentum with less risk
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- MetLife (MET) saw Q1 core premiums and fees grow 10%, driven by Asia jumping 22%, Latin America up 20%, and US Group Benefits gaining 15%.
- The insurer expects to lead the industry in margin expansion (20–25 bps annually) by using AI-driven efficiency to keep expense growth below revenue gains.
- Consensus estimates project ~25% EPS growth over the next two years, from $9.94 in FY2026 to $12.40 in FY2028, with ~5% of that growth expected from buybacks on the remaining $1.2 billion authorization.
- MetLife's average ROE of 17.2% sits at the upper end of its 15–17% target range, supported by strong sales, favorable group life underwriting, and rising alternative investments.
- The recommended trade is a September 77.5/87.5/92.5 call spread risk reversal — buying an at-the-money call, selling the higher-strike call, and selling the 77.5 put to lower net debit and reduce theta exposure.
- The September expiration was chosen to capture the August 6th earnings report, after which implied volatility typically falls sharply in a post-catalyst 'vol crush,' while September historically runs above-average volatility.
Why it matters: The September 77.5/87.5/92.5 call spread risk reversal lets bullish investors participate in MetLife's upside at a lower net debit than outright calls, but the short 77.5 put still obligates the seller to purchase shares at that strike if MET drops below it before expiration — making the trade a leveraged, defined-risk bet on the August 6th earnings catalyst holding up.
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