Place chocolate chips in a food processor and pulse until finely chopped. Place in a bowl and set aside. Mix peanut butter, sugar, softened butter, and cereal together. Form into 1 1/2 inch balls. Make a deep depression in the ball with thumb and fill with 1/4 teaspoon jelly. Smooth over to enclose the jelly in the ball. Roll each ball in chopped chocolate, pressing lightly until well coated. Place on waxed paper and chill 15 minutes. Keep chilled until served.