Glossary · Options

Max profit and max loss

The most a position can make and lose, if held to expiration.

Why it matters

Defined risk strategies cap the loss in advance. Size every trade on the max loss, never on the hoped for profit.

How to read it

Unlimited loss positions (like selling naked calls) are not suggested by Cluenex.

Related

Probability of profitThe modelled chance a position makes money if held to expiration.Credit and debitA debit trade costs money up front; a credit trade pays you up front.

In the Cluenex app, this explanation opens next to every max profit and max loss figure, with the live reading for the stock you are looking at. Open it in Cluenex