At the money

Moneyness describes where an option's strike sits relative to the price of the thing it is written on, and it has three states. A call struck below the current price, or a put struck above it, is in the money and carries intrinsic value equal to that distance. The opposite case is out of the money and carries none. At the money is the boundary between them, where the strike and the price coincide.

Strict coincidence is rare, so the phrase is used loosely for the listed strike nearest the current price. Practitioners disagree about which price it should be measured against: one convention uses the spot price, another the forward price for the option's expiry, and a third defines at the money by delta rather than by price at all. The three conventions select different strikes for the same expiry, so a quoted at the money volatility means little until the convention is named.

The reason the point matters is that it is where the option's value is most sensitive to everything except direction. Time value is at its greatest there, and so is the rate at which that value decays as expiry approaches, which is why an at the money option expiring exactly at the money expires worth nothing. Volatility surfaces are conventionally anchored at the money for the same reason, with the skew described as a departure from it. Moneyness describes the strike, never whether a position has made money.