How Is the Extrinsic Value of an At-the-Money Option Calculated?

An at-the-money (ATM) option has zero or near-zero intrinsic value because its strike price is equal or very close to the underlying asset's spot price. Therefore, the extrinsic value is simply the entire premium paid for the option.

ATM options typically have the highest extrinsic value and the highest Gamma and Theta, as they are most sensitive to time decay and small price movements.