Definition
An option is at-the-money when its strike price is equal or very close to the current market price of the underlying asset. ATM options have the highest time value and are most sensitive to changes in implied volatility. They represent the boundary between ITM and OTM options.
Formula
Example
When a stock trades at $100 and you have a $100 strike option, that option is at-the-money.
FAQ
What is At The Money (ATM)?
An option where the strike price equals the current stock price.
How do you calculate At The Money (ATM)?
A common formula for At The Money (ATM) is: ATM: Strike Price ≈ Stock Price
Why is At The Money (ATM) important?
At The Money (ATM) helps investors evaluate options and make more informed decisions.
Related Terms
In The Money (ITM)
An option with intrinsic value that would be profitable if exercised immediately.
Out Of The Money (OTM)
An option with no intrinsic value that would not be profitable if exercised.
Strike Price
The predetermined price at which an option can be exercised.
Vega (Options Greek)
Measures how much an option price changes for a 1% change in implied volatility.