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At the Money
(redirected from At the Money Option)

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At the Money
An option contract with a strike price exactly equal to the price of the underlying asset. In this situation, the option contract has no intrinsic value. However, it can easily develop an intrinsic value if the option becomes in-the-money. At-the-money options are extremely volatile because they can become in-the-money or out-of-the-money quickly.


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Also, for those of you that like options to hedge investments, the Financial Select Sector SPDR (XLF) offers at the money options with penny increment bid to ask spreads.
6 days left at the money option cost 12 points 6 days left out of the money option cost 2 points 70 days left at the money option cost 43 points 70 days left out of the money option cost 29 points There is more than 10X the time left but the 70 day at the money option (43 points) is only less than 4X the price than the 6 day at the money option (12 points).
For the at the money options, the regular calendar spreads are the way to go.
 
 
 
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