Writing (minting) an option In Oiler starts with the option writer selecting the option type they would like to write. It can be for example a hashrate put option (at any given time in the current version of Oiler there will only be one hashrateput option).
When writing an option one needs to lock 1 USDC of collateral for each option contract written. So if Alice writes 100000 hashrate put options then she needs to provide 100000 USDC. The collateral remains locked until the option expiration date. If the option gets exercised then the collateral is assigned to the option holder (writer has no longer any rights to withdraw the collateral from the smart contract).
It is possible to write an option and then hold it in order to follow up with an OTC (over the counter - directly between the market participants) trade. So Alice can write 100000 hashrate put options with a specific option code and then agree with Bob that she will send them for 0.2 USDC each. In the world of DeFi this will rarely happen (the participants remain mostly anonymous and they prefer trustless execution). The other approach would be to sell the newly written (minted) options to an AMM pool at the current pool price. Finally it is also possible to add the both sides of the AMM pool (provide liquidity).
So we have the following scenarios (numbers are picked arbitrarily):
1) Alice writes 100000 hashrate put options and sells them to Bob at 0.2 each.
2) Alice writes 100000 hashrate put options and sells them to the AMM at an average price of 0.18
3) Alice writes 100000 hashrate put options and then adds 20000 USDC and 100000 options to the liquidity pool.