What is 'At The Money'
At the money (ATM) is a situation where an option's strike price is identical to the price of the underlying security. Both call and put options can be simultaneously ATM. 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 ATM option has no intrinsic value, but it may still have time value prior to expiration. Options trading activity tends to be high when options are ATM.
Breaking Down 'At The Money'
At the money is one of three terms used to describe the relationship between an option's strike price and the underlying security's price, also called the option's moneyness.
Differences Between Types of Moneyness
Options can be in the money (ITM), out of the money (OTM), or at the money.
ITM means the option has intrinsic value. OTM means the option has no intrinsic value.
The intrinsic value for a call option is calculated by subtracting the strike price from the underlying security's current price. The intrinsic value for a put option is calculated by subtracting the underlying asset's current price from its strike price.
A call option is in the money when the option's strike price is less than the underlying security's current price. Conversely, a put option is in the money when the option's strike price is greater than the underlying security's stock price. A call option is out of the money when its strike price is greater than the current underlying security's price. A put option is out of the money when its strike price is less than the underlying asset's current price.
The term "near the money" is sometimes used to describe an option that is within 50 cents of being at the money. For example, assume an investor purchases a call option with a strike price of $50.50 and the underlying stock price is trading at $50. The call option is said to be near the money. The option would be near the money if the underlying stock price was trading between about $49.50 and $50.50, in this case.
Option Pricing
An option's price is made up of intrinsic and extrinsic value. Extrinsic value is sometimes called time value, but time is not the only factor to consider when trading options. Implied volatility also plays a significant role in options pricing.
Similar to OTM options, ATM options only have extrinsic value because they possess no intrinsic value. For example, assume an investor purchases an ATM call option with a strike price of $25 for a price of 50 cents. The extrinsic value is equivalent to 50 cents and is largely affected by the passage of time and changes in implied volatility. Assuming volatility and the price stay steady, the closer the option gets to expiry the less extrinsic value it has. If the price of the underlying moves above the strike price, to $27, now the option has $2 of intrinsic value, plus whatever extrinsic value remains.

Extrinsic Value
Extrinsic value is the difference between an option's market ... 
Strike Price
Strike price is the price at which the underlying asset of a ... 
Deep In The Money
A deep in the money option has a strike price significantly below ... 
Time Value
The portion of an option's premium that is attributable to the ... 
Option Premium
An option premium is the income received by an investor who sells ... 
Near The Money
An options contract where the strike price is close to the current ...

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What occurs when a security meets its strike price?
Learn more about the moneyness of stock options and what happens when the underlying security's price reaches the option ... Read Answer >> 
What is the difference between in the money and out of the money?
Learn how the difference between in the money and out of the money options is determined by the relationship between strike ... Read Answer >> 
How do I change my strike price once the trade has been placed already?
Learn how the strike prices for call and put options work, and understand how different types of options can be exercised ... Read Answer >> 
When is a put option considered to be 'in the money?'
Learn about put options, how these financial derivatives work, and when put options are considered to be in the money related ... Read Answer >> 
Why are options very active when they are at the money?
Stock options, whether they are put or call options, can become very active when they are at the money. In the money options ... Read Answer >>