At the money, which is also known as an ATM, is a situation where the option’s strike price is the same as the underlying security’s current market price.
In other words, an ATM can be defined as calls and puts whose strike price is at or very near to the current market price of the underlying stock or security.
ATM is also referred to as on-the-money.
For example, if a stock is trading at Rs 300 per share, then the stock’s 300 call option is ATM and so is the stock’s 300 put option. Both call and put options can be simultaneously At The Money (ATM).
As strike price and market price are the same, ATM options have no intrinsic value.
Intra day traders prefer to trade ATM options when they expect a large movement in a stock or market.
An option can also be out of the money (OTM) or In the Money (ITM).
