As per the definition of call option: A call is an option contract giving the owner the right, but not the obligation, to buy an underlying security at a specific price within a specified time.
But as we know currently stock options are settled physically which means call option buyer has the obligation to buy the underlying security at strike at expiry if it is ITM thereby resulting in margin calls if they don’t have the fund.
Similarly for put option: Put options give holders of the option the right, but not the obligation, to sell a specified amount of an underlying security at a specified price within a specified time frame.
So why is there a mandatory physical settlement of stock options on expiry if someone is long on call or put?
Doesn’t it changes the definition that both buyer and seller of options have the obligation at expiry?