An option is considered At-the-Money (ATM) when the underlying asset’s market price is equal to or very close to the option’s strike price.
For example, if a stock is trading at $50 and the strike price of the option is also $50, the option is said to be at-the-money.
At-the-money options have no intrinsic value — they consist only of extrinsic (time) value. Because of that, they are often used in strategies that depend on time decay or volatility, such as straddles or strangles.