At-the-Money (ATM)
At-the-Money (ATM) is a financial term used to describe a situation in which the strike price of an option is equal to the current market price of the underlying asset. In other words, the option has no intrinsic value. ATM options are typically used as a hedge against market volatility or to speculate on the direction of the underlying asset.
History of At-the-Money (ATM)
At-the-Money (ATM) options have been around since the 1970s when the Chicago Board Options Exchange (CBOE) was established. The CBOE was the first exchange to offer options trading, and it quickly became popular with investors. Since then, ATM options have become a popular tool for hedging and speculation. They are also used in a variety of other strategies, such as straddles, strangles, and butterflies.
Comparison of At-the-Money (ATM) Options
| Option Type | Strike Price | Intrinsic Value |
|---|---|---|
| At-the-Money (ATM) | Equal to market price | 0 |
| In-the-Money (ITM) | Greater than market price | Positive |
| Out-of-the-Money (OTM) | Less than market price | Negative |
Summary
At-the-Money (ATM) options are a type of financial instrument that have no intrinsic value. They are typically used as a hedge against market volatility or to speculate on the direction of the underlying asset. For more information about ATM options, investors can visit the websites of the CBOE, the International Securities Exchange (ISE), and the Nasdaq Options Market (NOM).
See Also
- In-the-Money (ITM)
- Out-of-the-Money (OTM)
- Option Strike Price
- Option Premium
- Option Delta
- Option Gamma
- Option Vega
- Option Theta
- Option Rho
- Option Time Decay
