What To Do When An Investment Tanks

Way back in January, I sold a $15 put on Tricon Residential. My thesis was that the company would continue to do well, share prices would go up, and I’d roll my money over once the put option expired in June.

Everything went as planned, until late April.

Tricon slid from over $16 per share, down to its current price of $9.54. And now, I’m holding an extra 100 shares from my options contract.

This article isn’t meant to be self-indulgent, and it’s not entirely focused on Tricon Residential. Instead, I want to explain what happens when a stock plummets fast and how you can re-appraise your investment.

I’m using Tricon as an example here, but you can use a similar process when evaluating your own assets.

The Initial Thesis

Here’s my initial motive for selling a Tricon put back in January:

• The company was established back in 1988 (meaning that it has experience in the real estate market).
• Tricon owns and manages 35,000 homes, mostly located in “Sun Belt” states like Florida and Texas.
• Long-term, the business is aiming to buy and own 100,000 rental properties. This means growth potential, plus an enormous source of recurring revenue.