An optical system, apparatus and method are capable of mutual occlusions. The core of the system is a spatial light modulator (SLM) which allows users to block or pass certain parts of a scene which is viewed through the head worn display. An objective lens images the scene onto the SLM and the modulated image is mapped back to the original scene via an eyepiece. The invention combines computer-generated imagery with the modulated version of the scene to form the final image a user would see. The invention is a breakthrough in display hardware from a mobility (i.e. compactness), resolution, and speed, and is specifically, related to virtual objects being able to occlude real objects and real objects being able to occlude virtual objects.