If I have a hedged option selling position, and due to margin utilisation norms, Zerodha auto square-off happens, do both the selling, as well as buying (hedged) position get squared off at the same time? Or is auto square-off done only for the selling position?
Ex: Nifty is a@22k, I am selling 2 lots of 22000PE and buying 2 lots of 21800PE. Market suddenly moves to 21000. Will all the positions get auto squared off, if margin utilisation is happening? Or just 22000PE gets auto squared off, and 21800 PE is not?
I am intrigued because if only auto square happens for the selling position, then the trader might land up losing a lot more than he intended, cos in a volatile market, in seconds, the hedged position can lose a ton of its value, if square off has to be done manually for it, when auto-square off has already happened for the selling position.
Kindly advise.