At the money describes an option whose strike equals the relevant underlying price, or the nearest listed strike under a stated market convention. The reference matters: an option on a futures contract is compared with its underlying futures price, not automatically with a spot quote.
Exact equality and practical labels
For an ordinary option at exact equality, both the call and put have zero intrinsic value. With a 100 USD strike and a 100 USD underlying reference, neither right contains a favorable price difference. Before expiry, however, either option can still have a positive premium reflecting remaining possibilities.
Listed strikes are discrete, so a screen may identify the nearest strike as ATM even when prices do not match exactly. That convention should not be mistaken for a claim that the selected option has precisely zero intrinsic value.
Why traders watch this region
Options near the money can be sensitive to changes in the underlying, remaining time and implied volatility. Traders use this region to compare premiums and volatility across maturities or construct combinations such as straddles. The label alone specifies neither a strategy nor its risk.
ATM does not mean a buyer has broken even, since the premium and costs still count. It also does not guarantee a 50% probability of profit. Exercise procedures and the final settlement reference determine expiry treatment; a current ATM classification can change before then.