All of Thetanuts' stronghold, basic, degen and long vaults are cash-settled. Only private vaults can be either cash settled or physically settled.
Cash settlement refers to a settlement type where actual delivery of the underlying asset is not required.
Physical settlement: refers to a settlement type where actual delivery of the underlying asset is required.
Example: Settlement price at 0800 UTC for ETH is at $2,700. The strike selected for the call vault was $2,500. There was a deposit of 1 ETH.
In the cash settled scenario, the value of ETH will be settled such that it will have the equivalent vault of ETH at $2,500.
In the physical settled scenario, the ETH will be swapped for USDC or equivalents that is equivalent to $2,500.