How Does the Concept of ‘Cash Settlement’ Apply to Cryptocurrency Options That Expire OTM?

Cash settlement means that upon expiration, the difference between the strike price and the final settlement price is paid in cash (or the underlying crypto) instead of requiring the physical delivery of the underlying asset. If an option expires OTM, the settlement value is zero, regardless of the settlement method.

No cash or crypto is exchanged, and the option simply expires worthless.