Selling a put because you "WANT TO" own a stock is even less consistent! The worst sin in trading is not profiting when you have the right call. If your stock rallied 20% before your option expires, you will miss out on most of those gains (the whole reason for owning the stock). If you are only looking to buy the stock cheaper then you have locked yourself into what that cheaper price may be. If the stock sells off further than what you have locked in, you have lost money. This nuanced market timing is incredibly difficult and you aren't compensated for that. Very few stock picker investors sell puts to acquire positions for that reason. Even the deep value guys who generally buy stocks and watch them fall before they turn around don't sell puts to "get a lower entry price." Pretty much every new options trader has had the same thinking you have. And all the smart ones figure out that if you want to own a stock just buy the damn stock; don't sell puts or buy calls or do anything else unless your view has a volatility component that is enhanced by trading options.
I didn't say that I use this strategy either; just that it's a good strategy for people who buy stocks to add to whatever other strategy that they use to pick those stocks. In your scenario, just as the person who bought that stock will need to choose whether to hold or sell, so would the put seller have the same choice, but the put seller would have a smaller loss.
My point is if you write a put ( as in this strategy) or write a call (covered call), you are limit yourself to potential gain when surprise price movements come in either big up or down. Covered call - you miss the upside Put writing - you miss the opportunity to buy it in even cheaper price.
This is a strategy for people who like a stock but are not willing to pay up unless they can get it at some lower price target - sometimes it's better to be patient and let the market come to you. The great advantage is that if waiting causes you to lose your opportunity, at least you've made money; and if it does come to you, then you've not only saved yourself money that you'd have lost by chasing or impulse buying, but you get paid an additional premium. If you're a perfect market timer with near infallible instincts, then this is not for you; but if you're that good, then why are you even messing with stocks when you can make so much more with calls?
I already addressed this: The only way you can do worse than simply buying on the dip is when the stock gaps down from above to below the strike price minus the premium and stays down until the stock is put to you; had you waited for the dip without using a put, then your limit order would have bought you the stock for less by an amount equal to the strike price minus the premium minus the post gap price. This would be a rare occuance and extremely rare for it to be a large amount; over time, its effect would be trivial in comparison to the option income. In other words, when you set a lower price target to buy into a dip you are also missing the opportunity to buy it yet even cheaper - except in a special rare occurrence which pales in comparison to the advantage put selling gives you every time, there is no added disadvantage to selling a put
Options by virtue of their expiry require market timing. this is getting circular and I've said my piece.
I seldom use limit or stop order , the reason is obvious. I think we are in circle here. They are pro and con in put writing.
My point would still be the same, even if you use a mental buy target. Yes, there are pros and cons, depending on what you're trying to do, which is exactly the point I've been making from the first: it's a good strategy for some people.
Really depends on the situation. If vol is 2 or 3 standard deviations out of whack and the big move has already happened and all that juice is still in the premium why not do it. Like Markuick mentioned its great if you don't feel like waiting for the price to come in more. The idea of getting paid to wait is very appealing and if shit gets crazy strangle it. A great hindsight example from one recent winner is SWI even after the big move happened there was plenty of time to take action but once vol tanked back to normal the risk reward vanishes. The other nice thing is when you are screening for these situations there won't be many opportunities so it's easy to scour though and pick the best situations.