This is such a clever effect effect that can be presented in so many ways!
Do it in a straightforward way, like the demo above. Simply ask the spectator to jot down a thought, give yourself a few seconds to "read" the person's mind, and tell him what was written. Fast and clean!
If you do a book test like the Million Dollar Book Test available below, you can get more out of both tricks by using them together. Let your spectator choose the word out of the book, then let him write the word on the pad. (Of course, you'll know that word because you know how to do the Book Test.) But here's the kicker- you ask him to write down another word, something obscure like the name of the city he was born in. You'll have a double reveal when you can not only name the word from the book, but also his birth city!
Added drama can also make this a very different type of trick. After you have your spectator write down his thought (and you have secretly learned what it is), tell him to hide the pad away. Now do another trick of some kind, so that some time passes and the focus is no longer on the pad. You finish the trick, and then say, "Oh, and by the way, you wrote ___ on the pad, didn't you?" Have him take out the pad, and you flip it open to reveal that you are correct. It will seem to the audience that the spectator wrote on the pad and hid it immediately, making it IMPOSSIBLE for you to know what he wrote.