What is At the Money (ATM) Call Option?
A call option is said to be ATM when the underlying security’s current market price is equal to the strike price of the contract.
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What is At the Money (ATM) option?
An option is said to be at the money if the spot price of the underlying is equal to the strike price. Any movement in the spot price of underlying from this stage would either make the option ITM or OTM.
What is At the Money (ATM) Put Option?
A put option is said to be ATM when the underlying security’s current market price is equal to the strike price of the contract.
What is Out of The Money (OTM) Call Option?
A call option is said to be OTM when the underlying security’s current market price is lesser than the strike price of the contract.
What is In The Money (ITM) Call Option?
A call option is said to be ITM when the underlying security’s current market price is greater than the strike price of the contract.
What is the effect of selling a Call Option?
The seller of the call option has an obligation to sell the underlying asset at the strike price if the buyer of the call option chooses to execute his right. The seller receives a ‘Premium’ from the buyer.