At-the-Money

In Stock Options an Option, Put or Call, is At the Money when the Stock Price is equal to the Strike Price in the Option Contract.

At the Money, is a term used in the Options Market. It refers to when the Stock Price of the Option’s underlying equity security, as currently traded, is equal to the Strike Price of the Option. For example, if the Strike Price of the Option is $55 and the Stock Price reaches $55, then the Option is At-the-Money. It is at this point that, for a Call Option, if the Stock Price moves higher, the Option moves “In the Money”. While for a Put Option if the Stock Price continues to fall then the Put Option moves “In the Money”. Thus, it becomes possibly worthwhile to Exercise the Option. If the Option Contract goes Out of the Money, then the true value of the Option will depend on Volatility and Time to Expiration.