A more thorough explanation:

Definition: A profit that is anticipated but not yet realized. It is a gain that has not been received yet, and it is only on paper until it is actually earned.

Example: If you buy a stock for $10 and it goes up to $15, you have a paper profit of $5. However, this profit is not realized until you sell the stock and receive the money.

This example illustrates the definition of paper profit because the gain of $5 is only on paper until the stock is sold and the profit is realized. Until then, it is just a potential gain that may or may not be realized.