Glossary term
ATM (At-The-Money)
An option whose strike price is approximately equal to the current price of the underlying; carries the highest gamma and the most time premium per day.
ATM (At-The-Money) describes an option whose strike price is approximately equal to the current price of the underlying. ATM options carry the highest gamma and the largest time premium per day, which makes them the most sensitive to both price moves and time decay. Premium sellers earn the most theta at ATM but also take on the most gamma risk. See Greeks 101.