I've participated in my employer's ESPP plan for many years and those are all good questions.
You seem focused more on managing the stock price risk, but if it's a "honeywell-like" company, their stock performance should be roughly similar to the S&P500, barring some kind of GE meltdown.
For me, the question was whether the asset concentration (and tying it to your employer) worth the likely payout? What is a competing investment alternative, and how would the risk/reward profile compare?
My "bet" was that my employer's stock would perform about as good as the S&P500, so I was buying into the investment strategy I was already going to do, but with a discount that gives you some buffer. Any volatility is just part of the investing package, it would likely happen whether invested in an index or a stock.
For company specific risk, I felt that as an employee I had a good sense how the company was doing relative to the economy and the S&P. I absolutely can confirm that the stock price is not connected to fundamental financial performance in the short run and impossible to predict.
To help diversify, taking the dividend as cash helps. 2% isn't bad! That's better than what you'd get with a bond.
Selling covered calls could be a fair amount of work for the premium, depending on the stock's volatility. You should confirm that you are allowed to sell options against the shares, given the lockup requirements. Even then, you'll have to actively manage the calls to make sure they don't go in the money and the shares get assigned, given the lockup constraints.