What is auto square-off in F&O trading?

In F&O, auto square-off refers to the broker automatically closing an open futures or options position, most commonly because of a margin shortfall that you haven’t resolved by adding funds or reducing the position, or because the position was intraday and you didn’t close it before the segment’s specific cut-off time. Overnight F&O positions carry ongoing margin requirements that can change day to day based on volatility, so a position that had sufficient margin when opened can later face a shortfall purely from market movement, triggering a margin call and, if unaddressed, an automatic square-off by the broker’s risk management system. The execution price during a forced square-off is whatever the market offers at that time, which is frequently worse than what you’d get by managing the exit yourself, and brokers typically charge a separate fee for this forced closure. You monitor margin utilisation closely on open F&O positions, especially overnight ones, specifically to avoid having the broker’s system make the exit decision for you.