Daily options trading small tips

Settlement – Cash settlement or physical delivery.

Cash-settled option does not require actual delivery of the underlying. Option buyers and sellers only settle the difference in cash payments.

Physical delivery of option requires underlying stocks to be delivered, rather than offsetting the contracts. Hence, the options buyers and sellers need to buy / sell the underlying stocks at expiration. It involves more capital usage. Hence, for traders who do not want to involve in stocks delivery, they can unwind the options positions before expiration.

FYI, US index options offered by Moomoo are cash-settled (non-deliverable) while single stock options are physical deliverable.