Maximum profit is the most money you can make on a trade if everything goes perfectly.
Long Call: Max profit = unlimited (stock can rise forever)
Short Call: Max profit = premium collected ($300 if you collect $3)
Bull Call Spread: Max profit = width of strikes - premium paid = (10 - 5) = $5 × 100 = $500
Iron Condor: Max profit = credit collected
Spreads have defined max profit. Naked options don't.
Credit Spreads: Max profit = credit collected
Example: Sell a $150 call, buy a $160 call, collect $2
Debit Spreads: Max profit = width of strikes - debit paid
Example: Buy $155 call, sell $165 call, pay $3
Most traders close at 50-75% of max profit instead of holding to max. This speeds up capital and improves returns.
Your profit target should be 50-75% of max profit. Then exit and move to the next trade.
Related: Max Loss, Breakeven, Profit Target, Risk Reward Ratio
