The premium is the price an Option buyer pays the Option seller, upfront, in exchange for the right (not obligation) the contract provides. It’s non-refundable regardless of what happens afterward, and it represents the buyer’s maximum possible loss.
Not the Same as Futures Premium
An Options premium (price paid for the contract) is a different concept from a Futures premium (Futures price above spot price) — the shared word describes two unrelated things.
Related Reading
See a full worked example in What Are Options? The Complete Beginner’s Guide.