 Okay, welcome back. In this section we are going to discuss analyzing the trade. Step one is determine your max profit and your max loss. Step two, we're going to set our price slices to break even to determine our initial probability of profit. Your probability of profit should be somewhere between 30 and 45 percent when you initiate a calendar trade. Let's go to the platform and take a look at the example. So when we set this up in the last video, we used the front month expiration of 42 days to expiration and the back month of around 77, which falls right in line with our criteria. When we go to the analyze tab, the first thing we want to do is click on the 3-bar menu over here, drop down and set slices to break even. I know this goes off the video page, I'm sorry I can't help that, but you'll see the expiration date and that's the one you want to click on. So in this case it expires in 917. So then we have our slices set. You also want to make sure that this calendar up here is also set to September 17th. And let's move that slice back. So now what you see is the initial probability of profit on this trade is about 32.5 percent. So between that 30 and 45 percent. And if we scrunch the visual together, as you can see this is a defined risk trade. So the max loss on this is $139, we go to this side, max loss this way is about $130, $131. So you know exactly what your max loss is when you're getting into the trade. This is only set at one contract. Let's kick that up to 10. And so then we can see our max loss on this trade is $1390. And our max potential profit is right at the peak here, which would be about $1154. Now A, we're never going to hold this trade to expiration and B, the chances of it landing right on $122 at expiration are very minimal. So we never want to expect that. However, it's good to know what your probabilities are right when you initiate the trade. Now keep in mind that that seems like a very low probability trade and calendars are initially a fairly low probability trade. However, the way that we trade them from beginning to end, including adjustments ends up making them a fairly high probability trading strategy. So if you go to show you an example of how this works, if you go to today's date is August 5th, we can take a look, we can play with this by going through time and if we move through time day by day, you can see our pink profit line increasing each day. So as the longer we're in the trade, the closer we get to expiration, you can see that pink profit line continues to move and move and move until expiration, at which time it will mirror the teal line, which represents our profit at expiration. So let's go back to today. So as you can see, as you move closer to expiration, that's how you're going to profit. The other thing that helps a calendar spread profit is an increase in implied volatility. So if we go to our spinning wheel down here and click on that, it'll pop out more parameters. There's one option that's a volume, excuse me, volatility adjustment. So if we increased volatility, so if price stayed exactly where it was, and we increased volatility by 1%, and let's say volatility increased by that 1% over the next week. So today's the 5th, so let's just go to the 12th. You can see we'd already be in a profit on this trade of almost $100, a little over $97. So again, what we want to happen is we're putting this trade on in a very low implied volatility environment. IV rank and IV percentile are at zero. So we're looking for an expansion in implied volatility, and when we get that, that's going to help our profit line. The other thing that volatility will do is take a look, let's get this back to zero to begin with, but take a look where our break evens are. Now when we have an increase in implied volatility, look at what happens to our break even points. They continue to expand as well. So our range in which we can make money expands as volatility expands. So this is a little bit different than an iron condor where the break even points are going to stay stagnant within a calendar due to the nature of the calendar and how volatility affects it, that is going to affect our break evens. So that's why this probability of profit only really matters at the initiation of the trade, not necessarily as much going forward because volatility is going to change, which is going to change our break evens throughout the trade. So this works both ways. If volatility continues to contract, that's going to make our break evens become even more narrow, and our profit line go down as well. So you can kind of think of a calendar on both sides. I like to picture it like an accordion where it can expand and contract, expand and contract. And so that will help give you an idea of how volatility affects the calendar. So if we go back to today. So you've taken a look to see here's what your probability of profit is. You know what your exact max profit and max loss are. In the next video, we'll talk about actually placing the trade. See you at the next video.