The range within which a particular position makes a profit. Generally used in refernce to strategies that have two break-even points - an upside break-even and a downside break-even. The price range between the two break-even points would be the profit range.
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The total universe of possible profits. With many investments, potential profit (and/or loss) is unlimited; that is, an investment theoretically could gain (and/or lose) an unlimited amount. With some option strategies, however, profit is limited to a certain, finite set. In such a case, calculating the profit range is useful.
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The range of potential profitable outcomes that result from a given investment position. Profit range is used extensively in putting together complicated option strategies in which gains or losses or both are limited to an established level.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.