A straddle whose strike is equal to (or closest to) the price of its underlying asset. It is a combination of a call option and a option put with the same strike price. In other words, it results from the addition of the prices of the ATM call and ATM put. The value of the straddle increases if the price of the underlying increases or decreases.

Options traders use this option strategy (volatility trading) to profit from an increase in implied volatility. If the market price of the underlying remains unchanged as the strike price of the option contract, both the seller of the ATM straddle and the seller of the ATM put will make a profit.