Initially LPs deposit a collateral asset into the SIREN AMM pool, e.g. for WBTC/USDC calls the collateral asset is WBTC. When traders buy options from the SIREN AMM, the collateral in the pool is used to mint a new token pair (a bToken and a wToken). bTokens are sent to the buyer while wTokens stay in the pool. When buyers make trades they pay a premium in the collateral asset. In essence, over time, LPs become covered option writers in a passive way, automatically underwriting contracts for which there is demand.