An at-the-money option (ATM) is an option whose strike price is equal to, or the closest listed strike to, the current price of the underlying asset. It sits between an in-the-money option, which would have value if exercised now, and an out-of-the-money option, which would not. If a share trades at $100, the $100 call and the $100 put are both at the money.
An at-the-money option has little or no intrinsic value, so its price is almost entirely time value. Time value, and the sensitivity to volatility and to the passing of time, are greatest at this strike. The delta of an at-the-money call is close to 0.5 and that of the put close to −0.5, and gamma peaks here. Quoted implied volatility usually refers to the at-the-money strike, which is why it serves as the reference point for an option chain.