When buying a stock, I put no more than 5% of my portfolio into that position. If the investment grows beyond that percentage, I won't rebalance, but my initial commitment is limited to 5%.
The same goes for writing puts. If the put is exercised, I'll be buying the shares, so I limit the number of contracts I write on any stock to a 5% position. I calculate this by the amount of cash used to secure the put, since that's the cash that would be buying the stock.
When writing put contracts, I aim for a 1% return per month. I write puts only on stocks I would like to buy at that strike price.
