Two picks. One safe. One high risk.

Adding two stocks to our portfolio in this week's trading period. One a undervalued bank and the other a high risk pick. 

We have for quite some time looked for an entry point into the big bank area and found one yesterday with JPM.  We consider JPM the best bank in the business due to the high return in investment.  We also think Jamie Dimon the best banker in the business as well.  Add in the bank has been selling off for some time due to some legal issues and our desire to pull the trigger was intense.  Yesterday JPM got hit with yet another bad PR day with some concerns regarding their Chinese hiring practices.  The deal is that the NY Times reported that JPM had hired some young employees that had ties to some big wigs in China.  Well, duh, when did this become a issue.  This goes on in the US everyday as companies position themselves for the marketplace.  On the same day the NY Times reported that Boston Red Sox fans booed A-Rod too.  That both of these were NEWS tells you about that newspapers view of what "news" has become.  The sell off of well over $1 per share yesterday got us in at the $45 level on a put option and we are most happy with the premium. 

The other stock we are pursuing and will be buying options on in the next few days is high risk JC Penney.  JCP is on it's deathbed due to lousy management and lousy sales.  We believe however it will survive in some form and the current $13 price is the bottom here.  JCP, like Sears Holdings, has some impressive real estate holdings and unlike Sears has some customers who like to shop in their stores.  This is a short term trade which we will try make on a month to month basis keeping our options wide priced and ability to get out if the news turns against us.   The near 50% annual return in option premium is hard to ignore and makes up for the risk in this stock. Our 40% under current selling price of JCP strike price gives us comfort and room to move if needed.  Understand this trade is NOT for home gamers.  High risk could and should produce high income.