Definition:
At-The-Money refers to an option whose strike price equals the price of the underlying equity, index or commodity.
Example of At-the-money :
If Pepsi stock is trading at $75, then the Pepsi $75 call option is at the money, and so is the Pepsi $75 put option. When the strike price and stock price are the same the option has no intrinsic value (since the strike and the underlying prices are the same). It will have time value (the stocks price may move in a favorable direction from now until the option expiry). The options that are at the money tend to be more active than when it is not at the money. These options are also referred to as ATM options (At The Money).
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