The Sparrow Option is an European cash-settled option which is automatically settled by smart contract. If Sparrow Options are In-The-Money, they are automatically settled. If they are Out-The-Money, the underlying assets are returned to the Seller. A Sparrow Option's contract specification is recorded and viewable in the smart contract.
Sparrow Options are cash-settled. The cash settlement amount is the difference between the Settlement Price and Strike Price. This is unlike physically-settled options, where settlement is done with the physical delivery of the underlying assets.