Careful with the attack mode number. This was -a 4 in hashcat-legacy. In modern hashcat -a 4 is the PCFG attack, which is something else entirely, so an old guide telling you to run -a 4 for permutations will give you a completely different attack. Modern hashcat has no permutation mode at all.
Each word in a dictionary generates all permutations of itself.
If our dictionary contains the words:
ABC
It generates the following password candidates:
ABC ACB BAC BCA CAB CBA
Note: the number of the resulting lines should correspond to the factorial of the number of characters within the original line, i.e. for a 3 character input we get 3! = 3 * 2 * 1 = 6 password candidates, for 4 character it is 4! = 24, for 5 it is 5! = 120 and so on.
permute needs no dictionary optimization. The old advice to run your dictionary through prepare first applied to oclHashcat, which no longer exists.
hashcat has no permutation attack mode. The tool that does this is permute, part of hashcat-utils, and you feed its output into hashcat:
$ ./permute.bin < words.txt | hashcat -m 0 hash.txt