I want to test my level in option selling for quite some time and recent margin benefit through hedging methodology just fueled the idea even further. I just want to clarify some doubt which may be sound too basic.I am having following understanding in option selling, Kindly correct me if i am wrong
1.If I sell an option ( call / put ) the moment i sell that option, the premium amount will get credit in to my account (as a phase 1 of my total profit )
2.Then when the time decay happens, it will expire at zero in which i will get further profit like below
Selling ATM Call option of abc company @ Rs 50 (lot size 1000)
The moment i sell the above option (with the required amount / margin ) i will get (50 1000 = 50,000) as premium (profit in my terminology )
2.Then when time decay happens , the above option will become zero so againt (501000 = 50,000 ) will be get credited when i square off my position on expiry.
So total profit is 1,00,000
Is this fundamentally correct or wrong.
Any views in the above scenario will help me to improvise myself in this arena.