First of all, there's no way a put that's 4.50 in the money is only selling for 4.20. You must be looking at stale prices. But that said, you still have your strategy backwards.
If you sell a put, then you're obligated to buy more shares at the strike price (the other side has the option to sell). So assuming the stock stays below $7, you'd get $4,200 now, pay another $7,000 when they expire and you'll have 2,000 shares that you effectively paid $5,500 for (2,700 + 7,000 - 4,200).
Selling puts on an already long position is effectively doubling down.
If you want to reduce your exposure without selling the stock, you can either sell covered calls or buy puts. Selling covered calls gives you income now but limits your upside. Buying puts costs you money now but sets a limit on your losses.
If you instead bought the puts for 4.70 (which is more realistic), then your loss would be floored at 400 (2,700 + 4,700 - 7,000), but you'd be stuck with that loss unless the stock goes above $7. To actually make a profit overall, the stock would need to go above $7.40 (to make up for the $400 loss).
