Last Wednesday, I told you about one of the best strategies in the world for beating an overvalued market. I use it to generate thousands of dollars in “Instant Income” from the best companies in the world. 

For example, we made $2,700 in “Instant Income” from a $6,400 “down payment” on MasterCard (NYSE: MA). That’s an immediate return of 42.2%. Last September, I collected $710 from Amazon (Nasdaq: AMZN), a company that’s never paid a single dividend. And this week, I collected $95 in “Instant Income” from Phillips 66 (NYSE: PSX) for every $1,200 I set aside.

If you haven’t guessed it already, my “Instant Income” strategy involves selling options. And right now, we have a huge opportunity…

You see, option prices are determined by several factors, including the underlying stock‘s price, the exercise price of the option and the amount of time until the options contract expires. These can all be easily determined. 

But one factor that is more difficult to assess is volatility.

We can get a general idea of whether volatility is high or low by looking at the CBOE Volatility Index (VIX), also known as the “fear index.” The VIX tends to rise as the market falls and traders become more anxious. On the other hand, when market prices rise, the VIX tends to decline. 

The chart below shows that the VIX itself is a volatile indicator.

Here’s why it matters: Options prices, in general, move in the same direction as the VIX. That means options are expensive when the VIX is high and cheap when the VIX is low. 

That’s great news for followers of my “Instant Income” strategy, because we are sellers of options, not buyers. We want them to be more expensive. That’s makes it easier to find options that deliver a lot of income. And I’m taking advantage of the spike in the VIX to collect even more income while I can. 

Let’s look at an example using one of the most undervalued stocks in the market…

Joy Global (NYSE: JOY) makes equipment used for mining coal, copper, iron ore, oil sands, gold and other mineral resources. This equipment includes electric shovels that can scoop as much as 135 tons of dirt at one time and machines that can carve out underground tunnels in coal and gold mines. It’s a “pick and shovel” way to invest in worldwide commodity demand.

I’m not the only one who thinks this is a good stock. Goldman Sachs identified JOY as one of the top 10 stocks with the greatest upside potential in 2013. Goldman thinks the price of JOY should rise to $83, about 32% higher than it is today, noting that “tightening commodity supply-demand balances over the course of 2013” will drive a recovery in the share price of JOY. 

I think shares are a steal right now. But instead of buying shares outright, we can use my “Instant Income” strategy to take advantage.

Shares are currently trading at about $63, and we could sell JOY April $55 Puts for $0.85. To initiate this trade, your broker might require a small “down payment” of about $1,100.

Selling these puts will generate an “Instant Dividend” of $85 (each contract controls 100 shares) per contract. This put will obligate you to buy Joy Global at $55 a share if the stock trades for less than that by April 19 (the last day these options can be traded). That is a key support level and a price I believe represents a bargain for these shares.

Assuming JOY trades for $55 or more on April 19, we keep the “Instant Income” and make a profit of $85 on $1,100 “down payment”, or 7.76%, in 53 days. If we can repeat a similar trade every 53 days, we’d earn a 53% return on our capital in 12 months.

If JOY trades for less than $55 on April 19, we’ll keep the $85 per contract and buy JOY at $55 per share. In this case, you’ll own JOY at a cost basis of $54.15 (the $55 strike minus the $0.85 premium, which you keep). At $54.15, we’d own shares at 9 times this year’s estimated earnings, a great price for a stock expected to grow earnings at about 11% a year.

My “Instant Income” strategy can be used on thousands of stocks. In fact, it can even be used to boost income on stocks you already own. I explain all this and more in a special presentation I put together. In it, I’ll tell you more about the “glitch” in the financial markets that’s allowing me to generate thousands of dollars from some the best companies in the world. Click here to learn how to get started now.