 Welcome back. In this lesson, I want to go over the options back tester that you can use to find statistics and probabilities to back up the different strategies before you place the trade. In navigation trading, we don't guess on the best strategy to put on for a particular trade. We have statistics and probabilities that back up every trade we make. So before you place a trade, you need to have some specific criteria. One, what's your market assumption? Are you long? Are you short? Or do you think it's going to stay in more of a neutral range over the period that you're trading? You need to pick a strategy. A lot of this depends on the implied volatility level. Are you selling a put vertical? Are you buying a long call? Are you selling puts, et cetera? What's your strategy? Next, you need to figure out when to enter the trade and when to exit the trade. Let's go to the options back tester and take a look at some examples. So right now we're looking at Apple. And let's just go down the line and take a look at the different scenarios. So what I'm showing here is if we were to choose call and we're shorting or selling the calls in Apple, what you can see is that the returns have been pretty negative across the board. I'm looking at several different examples. So selling the 60 Delta calls, 50, 40, 30, 20, just to look at some different scenarios. And you can see they've been losers across the board for the last three years. And I'm showing doing this every 10 days. Let's look at a more realistic example of what we do, 45 days to get a better idea. Again, still negative. But you think about this. What's the market assumption if you're selling calls? Your assumption is the stock is going to go down. Well, what's Apple done over the last three years? It's pretty much just gone up, right? So that's kind of the idea of getting to understand what the probabilities are before you place the trade. And obviously if we would have sold puts, it's a totally different story. Now look at the win rates. Now look at the, typically if we're selling puts, we're doing around the 30 Delta, 91% win rate, 61 wins, 6 losses. And that's obviously because a lot has a lot to do with the directional move of the underlying stock. You can look at covered calls for the same thing. So in this case, we want to buy stock and then sell calls against it. Again, a bullish strategy that's performed really well on Apple over the last few years. You could buy a call spread, another bullish strategy. So what you're seeing is all the bullish strategies perform very well. Now, what you want to figure out is how well did they perform specifically in relation to the stock? If you look down here, you can hover your mouse and you can see, for example, Apple stock performed over that period of time 61.4%, but all the different call spreads, no matter which strike you chose, basically performed better, except for that 50 Delta. So this will help you determine a strategy, but you've got to have that market assumption first. You've got to figure out which direction your market assumption takes you, long or short, and choose the appropriate strategy. And this option back tester will help give you the statistics and probabilities to back that up. One last one I'll show is buying a long put spread. Again, with Apple going up, this is performed poorly because the assumption when you put this on is bearish. So if you want to learn more about the options back tester, I've provided a link in the resource links, so you can check it out there. Hope this is helpful. Talk to you in the next lesson.