ATM (at-the-money)
ATM
An option whose strike is approximately equal to the current underlying price — pure time value, no intrinsic.
ATM options have the highest gamma and theta sensitivity (small spot moves swing payoff sharply; time decay is steepest near the strike). They're the most-traded part of the volatility surface.
Related terms
- ITM (in-the-money)An option that has positive intrinsic value — call strike below spot, or put strike above spot.
- OTM (out-of-the-money)An option with no intrinsic value — call strike above spot, or put strike below spot.
- OptionA derivative giving the holder the right (not obligation) to buy ([[call-option]]) or sell ([[put-option]]) at a fixed price by expiry.