An at-the-money (ATM) option is one where the strike price equals (or is very close to) the current stock price.
If Apple stock is trading at $150:
ATM options have the highest time decay of all options. They also have the highest gamma, meaning their delta changes the fastest as the stock price moves. This makes ATM options the most volatile in terms of price swings.
ATM options are also where the most trading volume happens, so they're usually the most liquid and have the tightest bid-ask spreads.
Income sellers (covered call and cash-secured put sellers) often target ATM or slightly out-of-the-money strikes. These have the best balance of high premium collection and reasonable chance of expiring worthless.
Long buyers sometimes avoid ATM options because of their high time decay. Instead, they prefer slightly in-the-money or out-of-the-money options depending on their outlook.
Related: ITM & OTM, Theta Decay, Gamma
