how is treasury futopt settled?

i have couple deep ITM ZN FOPs expiring in december. how does it work ?
since the underlying is not cash settled and there is no MM for it.

 

You'll get auto-exercised or assigned[if short] to the futures.

 

so i just have to make sure i am fully covered with the offsetting underlying right ?

 

Can anyone tell me why the 10 yr note Dec options at 108 (ZN Dec 108c) is currently 1/64Bid 2 offer 1x1. They expire Tuesday I think and since it is close to ATM, you'd think the mkt would be tighter? Thanks

 

The ITM treasury futures options are settled for the underlying contracts they represent. Long or short depending on your position