All listed US equity-options and etf-options are physically settled. Exercise moves shares and cash between accounts, which is why short options consume buying-power-reduction tied to the value of the stock rather than just the option.
Physical settlement is what creates the weekend risk that surprises new sellers: an assignment on Friday shows up as a share position on Monday, subject to whatever gapped overnight.
Example: you are short one XYZ $50 put, XYZ closes Friday at $49.90 and you are assigned. Monday morning XYZ opens at $46 on news. Your 100 shares cost $5,000 and are worth $4,600, a $400 loss that occurred while the options market was closed.
Related: cash-settled-option, assignment, deliverable, pin-risk