Rules for PUTs

I've spent the past couple of months working to qualify conditions when selling PUTs is appropriate.   Applying these new conditions makes many of my existing PUTs inappropriate.   Overall the corrective actions on these positions should be a inexpensive learning lesson (I hope).

When to start a position:
1.   Stock below 200 and 50 day moving averages.
2.  200 DMA and 50 DMA trending down.
3.  Nice if stock is still below 10  DMA.
4.  Check your own valuation to make sure you believe stock is undervalued.
5. Check stock versus your 15 Point Rule (2x yield + DGR) > 15.
6. Check opionion of stock from other sources (MStar, S&P, Reuters).
7.  You must be willing to own the stock.
8.  Try to initiate PUT position on down days.

What PUT to sell?
1.  At least 10% discount to the current stock price.
2.  DELTA under 20 (-.2).   IRA:  Delta under 33 (-.33).
3.  Duration:  Try to keep your expirations balanced, but 6-18 months are OK.
4.  Position size.  Exposure of <1% of total portfolio for naked PUTs or PUT spreads.  Start with 1/2 position willing to 'double up' at a better price.