Urgent need explanation regarding physical settlement of options

I have a short stock option contract that is now in the money. If I square it off today, will I lose the premium I received in addition to the mtm losses? Earlier, if i held to expiry, the mtm losses would first be deducted to the extent of the premium received. Pls clear this doubt of mine.

Assume you’ve sold an option at Rs.100 and the cmp is 125. To offset your position, you will have to buy the option at 125, thereby losing a total of Rs.25 (100-125) on the trade.

what about the premium that I received when i shorted the option? EG: I have a maruti 6800ce -75 @ 250. So i received premium of 250*75=18750. Now the option is trading at 841 and mtm loss is 44300. So my question is, if I sell it, wont the 44300 be first deducted from the 18750 premium that I received and the balance loss of 25550 goes from my pocket?

Your calculation isn’t correct, you would have to spend 841*75 = ‭63,075‬ to buy the option that you’ve previously shorted. Therefore the gross debit will from the trade will be (250-841)*75 = 44325 and not 25550.