Step 1: Things You Will Need...
rubber bands/hair ties (2 or more)
For the easy version, you will only need one pencil and both of your hands.
Step 2: Easy Version
Hold the pencil in your hand like in the picture above with your other hand around your wrist. Without your viewers knowing, have your pointer finger firmly holding the pencil to your palm.
Step 3: Professional Version
That's why I've included a trick for the magician that prepares beforehand.
For this version of the floating pencil trick, you will need to put the two rubber bands around one wrist. Insert one of the pencils under the two rubber bands so that it goes out past the middle of your palm but not visible from the back side of your hand. I would suggest an unsharpened pencil to avoid getting poked. This pencil will act as your index finger in the previous description. Next, put the pencil in your palm and under the first pencil.
Step 4: A Few Suggestions...
For the professional version, pull your sleeve over your wrist to hide the rubber bands. This will prevent viewers from noticing the secret to your trick.
Leave your hand clenched tight for a moment and then open your hand intensely to increase the suspense.