An at-the-money option, that is, an option which has a strike price equivalent or approximately equal to the underlying asset’s price. There is little or no intrinsic value in ATM options. In other words, this option would generate zero cashflow if it were exercised in its current moneyness state. For instance, if XYZ stock is currently (in February) trading at $55, then the March $55 call or put would be at-the-money.

An option on an index would be at-the-money when the current index value equals the strike price. For example, an index option with strike price of 1300 would be at-the-money when the index is currently trading at 1300. ATM option prices are usually used to figure out annualized volatilities.