Authorize.net-What options to use for CCV code?

I am configuring my Authorize.net account for my new website and there is a section where I can select how to handle the CCV codes for credit cards. I have the following screen for my setup:

Select the conditions for which the Payment Gateway should reject a transaction when the Card Code submitted does not match the value on file with the customer's credit card company.
Reject Transaction If Card Code value...
Does NOT Match (N)
Is NOT Processed (P)
Should be on card, but is not indicated (S)
Issuer is not certified or has not provided encryption key (U)
My idea is I should set it to reject the card code value if it does not match. I want to protect against fraud and my thoughts is anyone with the card in their hand should know the code. Maybe some people haven't heard of it if they haven't done much online shopping or may not know where to find it on the card. Since this is a new website for me and my first time using direct credit card processing (my only experience is Paypal) what in general is good settings for this?

You will want the user to use the CCV.

Spend the $5.00 and opt for the fraud guard that they offer, then you can control the suspicious transactions.