Best PS4 audio settings for Hi-Fi headphones?

Hello,

After wanting to venture into the world of better sound for gaming and doing a little bit of research, I decided to ditch my Turtle Beaches and get myself an AKG K553 to use for my gaming.

However, I honestly don't know too much regarding audio and hardware, so I'd love some advice! I plugged my new headphones' 3.5mm into my PS4 controller, and I do hear sound. But what should I choose for my PS4 "Audio Output Settings?"

For my headphones, is there a difference between HDMI Out and Digital Out (Optical) for the "Primary Output Port?" And are there differences between Linear PCM, Bitstream (Dolby), and Bitstream (DTS) for the "Audio Format (Priority)" setting?

Any help would be greatly appreciated!