NEW YORK (TheStreet) -- After imploding by more than half from the start of the year, buying J.C. Penney (JCP) - Get J. C. Penney Company, Inc. Report may feel like stepping out on railroad tracks and stopping a freight train with your hand.

If you're too early, your account can get trampled faster than you can say "margin call," as many have found out. That's the reason why I've been critical of J.C. Penney, especially after they blindsided investors with a 38% share dilution that sent shares falling to multi-year lows. But as the facts change, so must our opinion.

The financial situation is the same, not much has materially improved, but instead of paying over $10 a share, we can now buy the retailer for under $8.50. In fact, I will show you how you can lower your risk to under $7 a share while leaving room of a possible 10% gain in about three months.

A patient and disciplined investor can use market fear of never-ending losses to their advantage by waiting until the dust settles and enough weak hands have thrown in the towel that the stock essentially "runs out of sellers."

Of course, every trade has a buyer and seller, but we also know that when buying pressure increases and demand outstrips supply, the overall price of shares will move higher. That's exactly what we are witnessing now with J.C. Penney, and we can expect it to continue.

Last month, I gave an opinion that selling $8 strike put options provided a positive expectancy based on the outsized premium in relation to potential risk. After almost six weeks, option writers have been rewarded with considerable time decay. The November strike is about to expire, but that doesn't mean this trade is over.

Clearly, J.C. Penney has a full plate of challenges. Kohl's (KSS) - Get Kohl's Corporation (KSS) ReportMacy's (M) - Get Macy's Inc ReportSears (SHLD) Target (TGT) - Get Target Corporation Report and Wal-Mart (WMT) - Get Walmart Inc. Report are not about to relinquish the non-stop implicit collusion that all department stores have against each other as they individually strategize to gain every possible edge.

It's the same highly competitive market space that led Goldman Sachs (GS) - Get Goldman Sachs Group, Inc. (GS) Report to warn J.C. Penney bond holders to buy insurance against default, known as collateralized debt obligations because of fear of default within the next couple of years.

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To be sure, senior J.C. Penney bonds encompass less risk than buying stock. If the company goes out of business, bondholders can expect to receive some if not a considerable amount of their investment back. On the other hand, shareholders can expect next to nothing. However, shareholders are also positioned to receive the lion's share of reward if the company gets back on track.

It doesn't even need to get fully on track to profit. Halting the cash burn will pop the shares much higher, and J.C. Penney should have no problem turning around investor's negative perception on its future viability during the holiday season's sales. As someone who has spent years in retail, I know that the holiday season's sales can erase a lot of mistakes.

Keep in mind that the end of the year doesn't spell the end of strong sales. January is one of the best revenue and income producing months. In part, it's the timing of the earnings release along with expected guidance that I believe selling the January $8 put option makes such a strong investment thesis.

At a sales price of $1.05, total J.C. Penney exposure is reduced to $6.95. If the shares decline in value and the options are exercised, the cost basis begins at $6.95, but you can immediately write a call option against it, further reducing risk.

If the shares catch a bid and climb to $9.05 you make the same as if you bought the shares outright, albeit with much less risk. Over $9.05 and you forfeit any increase above that amount, but that's offset by the fact if the shares do nothing but sit at $8.35 until option expiration in January you make the full amount, just as if the stock increased in price.

For Real Money Pro investors that sold $8 put options a little more than a month ago, that's exactly what happened. The shares dipped in price, and are now about the same, resulting in a profit of the entire option premium provided J.C. Penney closes Friday above $8. Now is a fantastic time to rinse and repeat.

At the time of publication, the author was long JCP.

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This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.