What Is the Practical Difference between a “Near-the-Money” and an “At-the-Money” Option?

At-the-Money (ATM) strictly refers to the option whose strike price is exactly or extremely close to the current underlying price. Near-the-Money (NTM) is a broader, less precise term referring to options that are slightly ITM or slightly OTM, but still very close to the current price.

Practically, NTM options behave very similarly to ATM options in terms of high time value and high sensitivity to price changes (Gamma).