In Options Trading, How Can Smart Contracts Manage Collateral and Margin Calls?

Smart contracts automatically lock up the required collateral from the option seller (writer) upon creation. The contract continuously monitors the position's value and the collateral ratio.

If the market moves adversely, the contract can automatically trigger a margin call by demanding additional collateral. If the margin is not met, the contract can automatically liquidate the position to cover losses.

This removes the broker's manual role.