 Hey everyone, welcome to another video lesson from NavigationTrading.com. In this video I want to answer the question, should you hold your options until expiration or take profits early? So to explain this I want to show an example and do a back test. So we are looking at the E-Delta Pro back testing software that we use to back test different strategies. And what I'm looking at here is a simple strategy we call a short strangle. And in this case we're selling the 20 delta put and we're selling the 20 delta call. We're looking at a five year back test. We're entering our trades at around 45 days to expiration. And in the first study we're going to look at just letting these positions expire. And so we're just going to put them on and then let them expire after the 45 days and see what the results are. So up here in this box gives you a quick summary. We have an average profit per trade of $55. We have a total PNL of a little over 67,057% rock return on capital $1.27 per day is the trade profit average duration 43 days standard deviation $326 we took 1229 trades during this period with a win rate of 72%. So not bad, right? So what I did next is in the next study for a comparison, a very simple comparison just taking these two different variables into effect. And what I said is instead of letting this one expire what we did is we took profits early and we took profits at 40% of max profit. So in real life trading what we like to do is we like to take profits on this strategy on short strangles between 30 and 50% of max profit. If we get 30% pretty quickly we will take that. If it takes a little bit longer we might wait and take 50% of max profit. So I just chose something kind of in the middle and chose 40%. And here are the results. Now the first thing you'll notice is that the PNL per trade is lower which makes sense because we're letting this one go all the way to expiration so the profit per trade would be higher letting it go to all the way to expiration. But that doesn't tell the full story. The key metric that you want to focus on when you're making comparisons like this is the PNL per day. And the reason why that's more important you see $1.27 per day here and when we take our profits early we're making now $1.75 per day. Our trade duration is only 22 days versus 43 days. So we're in the trade for about half the time and look at our win rate. It jumps from 72% all the way up to 89%. So that's important because when we are taking our profits early we now have that capital available in our account to redeploy into new strategies. And so that's why that PNL per day is such an important metric when you're comparing these two types of scenarios. So we like the higher win rate, we like the higher PNL per day. And so taking profits early is the answer when you're selling premium in a strategy like this. And this goes for strangles, goes for iron condors, butterflies, iron butterflies, anything where you are kind of a net seller of options, taking profits early almost always makes sense. Here's the other key factor in this and that is if you let positions go all the way to expiration and you have in the money options, then you also run the risk of assignment and getting assigned and paying assignment fees. It changes the dynamic of your position from what you originally put on. So this helps us not only avoid and minimize the whole assignment scenario but it also gives us a more profitable strategy. And you might be saying $1.27 a day versus $1.75, is that really that significant? That's over a 37% improvement in your PNL per day from $1.27 to $1.75. So yes, that is a significant improvement. So the answer to your question, do I let my positions go all the way to expiration or do I take profits early? The answer is take profits early. I hope that was helpful. We'll see you in the next lesson.