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Physical option refers to monitoring through a physical speaker layout, while binaural monitoring can be enabled in the Renderer preferences.
Could you try the following?
1. Open Preferences in the Dolby Atmos Renderer.
2. Under Monitoring, make sure Headphone Render mode is set to Binaural.
3. Under Outputs, enable Headphone Only mode.
These settings are highlighted in the screenshot attached. Please let me know if this works.
You may also find more information in Dolby Atmos Renderer User Guide helpful, which is included in the installer and is also available online here: https://customer.dolby.com/content-creation-and-delivery/dolby-atmos-renderer-v550/documentation/dolby-atmos-renderer-installation-and-configuration-guide
If the issue persists, could you provide a few more details about your setup, including which headphones you are using? Thank you!\
Best,
Heesuk