what is option premium in zerodha

Option premium in Zerodha refers to the amount paid or received on buying or selling particular options. It is the price that an option buyer pays or an option seller receives. In the funds tab of Kite, the option premium displayed is the total or net premium received from shorting/writing options. The available cash column includes this amount, and in the case of multiple trades, the option premium value is calculated by adding up the average price of all sell orders placed for the specific contract. The proceeds or credit of option premium can be used for only new long/buy option positions or to exit existing long/buy option positions.