What happens to OTM positions marked for physical delivery?

What happens to OTM positions marked for physical delivery?

No, you do not need to mark physical delivery for OTM options.

Here’s why:

OTM (Out-of-the-Money) options have no intrinsic value at expiry.

These contracts expire worthless, meaning there is no obligation to give or take delivery.

Physical settlement is only applicable for In-the-Money (ITM) options where the strike price has value at expiry.