Investor Glossary-at the money optionInvestor Glossary-at the money optionInvestor Glossary-at the money optionInvestor Glossary-at the money optionInsightful stock market charts - Click here
investor
Categories    # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

At The Money Option

The HTML to link to this page
 

An at-the-money option is an option whose strike price is equal to the market price of its underlying security. For example, if a call option on stock XYZ, Inc. has a strike price of $50 and XYZ stock is currently trading for $50 per share, then this call is trading at-the-money. However, the buyer of an at-the-money option would not exercise the option as long as it remains an at-the-money option since it has no intrinsic value. Intrinsic value is only part of the option premium. Prior to the option's expiration date, an at-the-money option also has time value. The time value of an at-the-money option is influenced chiefly by the amount of time remaining until the expiration date. The other major factors affecting the premium of an at-the-money option are the volatility and dividends of its underlying security along with the current risk-free interest rate (e.g. the T-bill rate).



Rate this At the money Option definition...

Learn about investing with the Investor Glossary Term of the Day


Click here for insightful stock market charts. Where is the market headed? The answer may surprise you. Find out
with the exclusive & Barron's recommended charts of Chart of the Day.


Popular Terms: irrevocable trust, minority interest, Zero Cost Collar, 144a, open position, EBITDA, 1035 exchange, annual return, FICO score, phantom income, in escrow, diluted share, deferred revenue, real GDP, deferred tax, current ratio, FTSE, 1031 exchange, dividends payable, margin rate, stock market close, limit order, VIX, retained earnings, per diem, debt service coverage, class C shares, stock split, average price per share, ex-dividend, command economy, ex-dividend date, reverse mortgage, liquidity ratio, option premium, risk management, quality assurance, 401a, required rate of return, cancelled check, implied volatility, covered put, LIBOR, Key Rate Duration, labor relations, wholly-owned subsidiary, APR, balance sheet, inflation


Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
Investor Glossary | Term of the Day | Suggest a Term | Chart of the Day | Dogs of the Dow
©2004-2016 Investor Glossary - All rights reserved - Terms of Use