TeenAnalyst.com

At the Money
Term category: Derivatives
In 10 words or less: When an option's strike price equals the price of the underlying security.

Definition: An option is at the money when its strike price matches the price of the underlying stock.

Advice: For example, if you bought a call option on XYZ with a strike price of $35/share when the stock was at $30/share, it'd be out of the money (worthless).  If the stock rose to $35/share, though, it'd be at the money.

If you ignore transaction costs (the premium you pay to buy the option), the point where an option is "at the money" is the breakeven point.

 

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