The S&P 500 has been on fire in 2013 — up an impressive 30%.

But the question I’m getting the most from readers right now is, “Is the market about to correct?” 

It’s not hard to see why. The S&P 500 is up more than 160% since the bull market started in March 2009.

But I’m not worried about a correction… and neither should followers of my “Instant Income” strategy. Rather than engaging in panic selling or trying to buy on a dip (potentially catching a “falling knife”), they’re taking the emotion out of investing by telling the market exactly what they want to pay for quality stocks they want to own.​ Even better, they get paid to wait until they buy.

By utilizing a conservative strategy that involves selling put options contracts, you can in effect get paid to buy stocks at a discount.

To recap, “put” options give investors the right — but not the obligation — to sell a stock at a specified price before a specified date, known as the expiration date. Selling a put obligates us to purchase that stock from the put buyer if it falls below a specified price, known as the option’s strike price. When we accept that obligation, we receive cash, or what I call “Instant Income,” upfront, known as a premium.

If you’re a little confused by that, don’t worry. Here’s an example of a trade I recently recommended that should help clear things up. 

Tesoro Corporation (NYSE: TSO) operates six refineries in the western United States with a combined capacity of over 845,000 barrels per day. Tesoro’s retail operations include over 2,200 gas stations under the Tesoro, Shell, Arco and USA Gasoline brands.

TSO is the second largest independent oil refiner in the United States and should continue to grow thanks to smart moves by its management. Specifically, management has been reinvesting profitably in its existing business during the past few years, and it’s showing in TSO’s bottom line.

In September 2012, for example, the company completed a project that invested $60 million in the Bakken oil field. As a direct result of this project, TSO expects to see annual earnings before interest taxes, depreciation and amortization (EBITDA) increase by $160 million to $180 million per year. The annual internal rate of return (IRR) on that project is now expected to be 220%. 

A $275 million investment in a refinery in Salt Lake City generated an annual IRR of 30%. Three other recent projects required an investment of $110 million and generated annual EBITDA of at least $75 million, an IRR of 68%. The company is targeting an IRR between 20% and 60% on its future capital projects.

These projects show the opportunity that TSO has to increase the value of the company. The full impact of these projects should show up in the bottom line in 2014, when analysts expect earnings per share (EPS) to climb to $5.71 from $3.29 in 2013. Eleven analysts have published forecasts for 2015, and they expect EPS to grow to $6.18. 

TSO has great financials and a safe 1.7% dividend. But instead of recommending readers to buy shares outright, I advised them to sell puts. Selling puts allowed them to generate income upfront for the chance to buy shares at a lower price. 

I recommended selling TSO Jan $50 Puts for about 70 cents, when shares traded at about $56.30. That’s a put that expires on Jan 17 and paid sellers a 70 cent per-share premium, or $70 per contract (a contract is for 100 shares).

If shares of TSO trade below $50 on Jan. 17, we’ll be shareholders at a cost basis of $49.30 a share ($50 – $0.70). At $49.30, we’d own shares at 8.6 times estimated 2014 earnings — dirt cheap for one of the most dominant refiners in the country. Plus, we’d lock in a 2% yield and be able to sell covered calls on the position to generate additional income.

If shares remain above $50 until Jan. 17, we keep the premium and make a profit of $70 on $1,000 (our “down payment” to initiate this trade). That’s like getting a 7% yield in 33 days. If we can repeat a similar trade every 33 days, we’d earn the equivalent of a 77% yield in “Instant Income” every 12 months.

It’s easy to see how a conservative approach to options like this can be the closest thing to a “can’t lose” strategy. And so far, it’s proven to be just that. I’ve scored 33 winning trades out of 33 so far, which is why Income Trader subscribers have been able to collect as much as $150,000 in income since the newsletter launched in February. And while I can’t guarantee every trade will be a winner, you can see the results for yourself and learn more about this strategy by watching this special presentation.

P.S.– You can get my recommendations and start profiting at a 50% discount if you act today. To join Income Trader at the lowest price we’ll ever offer, click here.