Can I use the Options Premium received to place new orders in F&O?
Yes, Options premium received on selling options contracts can be used to place new orders. However, it cannot be used on the same day but from the next trading day.
For Example, Mr X shorted 1 lot of Nifty 18000PE trading at 100. The premium of ₹5000 (50 Qty*100) will be credited to his account on the same day. However, Mr X can only use the same for placing new orders from the next trading day.
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What does Premium mean in options?
Premium is the downpayment that the buyer is required to make to the seller for entering into the options contract.
What is the impact of moneyness on options premium?
It is widely seen that ITM options command the highest premium, followed by ATM options and lastly by OTM options.