The Option key (the Mac name for the Alt key) by default has other uses. Press Command+O to open the list of profiles, select Default (I assume that is the profile you are using), and click “Edit Profiles…”. In the resulting window, click on the “Keys” tab, and select “+Esc” for one or both option keys. This should cause iTerm to treat the Option key the way you are accustomed.
Alternatively, you can simply use the Escape key instead.
