🦹‍♀️Covered Call

You buy a covered call when you are bullish on the price of the underlying and thinks it will trade higher in the future.

You then hedge by buying this contract and have a great leverage to make gains.

The writer of the contract must escrow his ERC1155 asset as underlying, therefore deposit the asset in the contract.

Each Call Option Contract is represented as an ERC721 asset that can be sold on the marketplace.

It is minted when writer creates the contract by putting his ERC1155 as underlying.

When one sells his NFT option he loses the ownership of it obviously. Though, one must be aware that the initial writer of the NFT contract still owns the underlying ERC1155.

By buying such a contract you just pay a premium to have the right to exercise at expiration.

In this case, if odds are by your side, then you will exercise to receive the ERC1155 underlying.