Covered call: you deposit a token you already hold (e.g. WETH) and write a call on it. The buyer pays you a premium upfront. If price stays at or below strike at expiry, you keep the premium AND your tokens. If price ends above strike, your tokens are sold at the strike price — you still keep the premium and the upside up to the strike.Covered put: you deposit stablecoin (e.g. USDC) and write a put on a token. The buyer pays you a premium upfront. If price stays at or above strike at expiry, you keep the premium AND your stablecoin. If price ends below strike, you buy the token at the strike price using your stablecoin — you still keep the premium and a discounted entry into the token.