Setting up PS5 with LG C3 and Yamaha RX-V500d

I bought a new TV and am not sure what is the best way to connect the 3 systems (TV, PS5 and AVR) together.

Of course I want to make use of the LGs gaming features, like 120hz, ALLM, VRR etc.
I am not sure how ALLM or VRR is affected by the AVR but at least the 120hz wont be available when I connect my ps5 to the Yamaha, right?

So my question is, how would I connect them to get all the features of each system? I am thinking TV to ps5 via HDMI and TV to AVR via optical cable. Will this have any affect on the audio since it will have to go from ps5 to tv and then to avr (is this even possible?)?

The Audio is a 5.1 system