At The Money
At The Money (ATM) refers to a scenario in which the strike price of an options contract is equal to the market price of its underlying security. In this situation, exercising the option does not result in a profit or loss since the option’s intrinsic value is zero. Exercising an option At The Money may lead to a loss because the premium paid for the option will not be recovered. However, At The Money is still considered a positive indicator, as it suggests the option may soon move in the money (where intrinsic value is generated), depending on future market movements.
Related Terms
Holding Company
A holding company is a parent entity that owns a stake in one or more...
Depository Participant
A depository participant (DP) is a financial entity linking investors to depositories like CDSL or...
Circuit Breaker
A circuit breaker is a regulatory mechanism used by exchanges to temporarily halt all trading...
Hedging
Hedging is a risk management strategy used to offset potential losses by taking a position...
Delivery Trading
Delivery trading involves buying/selling a security and settling it by taking/giving delivery. Unlike intraday trading,...
Deferred Tax Liability
Deferred tax liabilities stemming from temporary differences—when an liability is recorded on the balance sheet...
