How Can a Smart Contract Manage the Margin Requirements for Writing a Covered Call Option?

A smart contract can enforce margin requirements by requiring the option writer to lock the underlying asset (the collateral) within the contract before the call option is issued. This "covered" collateral is held by the contract and can only be accessed by the option holder if they exercise the option, or by the writer if the option expires worthless.

The contract automatically checks and maintains this collateralization level.