At-the-money

When the price of the underlying equity, index or commodity equals the strike price of the option. At the money option would lead to zero cash flow if it were exercised immediately. Therefore, for both call and put ATM options, strike price is equal to spot price. At the money is a situation where an options strike price is identical to the price of the underlying security. Both call and put options are simultaneously at the money. For example, if XYZ stock is trading at 75, then the XYZ 75 call option is at the money and so is the XYZ 75 put option. An at-the-money option has no intrinsic value, but it may still have time value. Options trading activity tends to be high when options are at the money. At the money is one of three terms used to describe the relationship between an options strike price and the underlying securitys price, or option moneyness. The other two are in the money, meaning the option has some intrinsic value, and out of the money, meaning the option has no intrinsic value. The intrinsic value for a call option is calculated by subtracting the strike price from the underlying securitys current price. The intrinsic value for a put option is calculated by subtracting the underlying assets current price from its strike price. A call option is said to be in the money when the options strike price is less than the underlying securitys current price. Conversely, a put option is said to be in the money when the options strike price is greater than the underlying securitys stock price. A call option is said to be out of the money when its strike price is greater than the current underlying securitys price. On the other hand, a put option is said to be out of the money when its strike price is less than the underlying assets current price.