Physical settlement in futures and options means settling using stocks instead of money. By default, on expiry, all stock-related F&O positions are settled for money on Groww. But if you opt for physical settlement, you will either give or receive stocks (instead of money) in your demat account after settlement.

Most people trading in futures & options usually have just a small portion of the overall contract value blocked as margins (in case of futures and short options) or premium (in case of long calls & puts), and the actual obligation of taking or giving delivery can be exponentially higher.

As per the exchange, users having open positions of long/buy ITM options (calls & puts) have to maintain margins as given below:

Expiry - 4 : 10% of Delivery margins
Expiry - 3 : 25% of Delivery margins
Expiry - 2 : 45% of Delivery margins
Expiry - 1 : 70% of Delivery margins
Expiry : 100% of Delivery margins