https://v2.webnotes.in/tags/premium-credit/Recent content in Premium Credit on WebNotesHugoen-INWed, 20 May 2026 00:00:00 +0000https://v2.webnotes.in/use-option-premium-received-as-margin/Wed, 20 May 2026 00:00:00 +0000https://v2.webnotes.in/use-option-premium-received-as-margin/<p>When you sell an option (<a href="https://v2.webnotes.in/option-premium-credit-on-kite-funds/">Option premium credit on Kite funds</a> ), the premium received is credited to your account as cash. This credit counts as cash-equivalent for margin purposes, including the <a href="https://v2.webnotes.in/50-50-cash-collateral-rule-explained/">50:50 cash collateral rule</a> .</p> <h2 id="how-it-works">How it works</h2> <p>Example: Sell 1 NIFTY 22000 CE at Rs 100 premium.</p> <ul> <li>Lot size 50 → premium received = Rs 5,000.</li> <li>Cash credited: Rs 5,000.</li> <li>SPAN + Exposure margin for short call: ~Rs 1,30,000.</li> <li>Net new funds required: Rs 1,30,000 - Rs 5,000 = Rs 1,25,000.</li> </ul> <p>The premium effectively reduces the new capital needed.</p>