Options which have a Strike Price that is currently the same as the market price for the Underlying asset or commodity are known as At The Money.
At The Money Options have no Intrinsic Value to the holder of the option because they can only be exercised for at the same price as the instrument is currently trading for in the market. This does not mean they are worthless, however, their value will depend on how close the option is to Expiration date and the Volatility of the Underlying instrument (this is known as the Extrinsic Value of the option).
At The Money Options tend to be more heavily traded (and, therefore, liquid) than Out Of The Money or In The Money contracts.
Contributed by: Ralph Windsor
At The Money Options have no Intrinsic Value to the holder of the option because they can only be exercised for at the same price as the instrument is currently trading for in the market. This does not mean they are worthless, however, their value will depend on how close the option is to Expiration date and the Volatility of the Underlying instrument (this is known as the Extrinsic Value of the option).
At The Money Options tend to be more heavily traded (and, therefore, liquid) than Out Of The Money or In The Money contracts.
Related Directory Entries
External Links
At The Money Definitionhttp://www.investopedia.com/terms/a/atthemoney.asp
Investopedia explanation of At The Money.
What Are At The Money Options (ATM)http://www.optiontradingpedia.com/at_the_money_options.htm
In-depth article describing At The Money Options.
View Options Tradingpedia Glossary in Options Market Glossary Directory
Comments
There are currently no comments for this term.
Post a Comment
You must be registered and logged in to post a comment.