What is true about one-cancels-the-other (OCO) orders at order entry?

The statement regarding the characteristics of one-cancels-the-other (OCO) orders is accurate because an OCO order essentially combines two orders: a limit order and a stop order, where the execution of one order cancels the other. Specifically, for a sell OCO order, the stop limit must be lower than the limit order price to ensure that the stop order can trigger under appropriate market conditions, allowing the trader to exit a position if the price drops. Additionally, it must be lower than the best ask limit in the order book (OB) to ensure that it can be executed before hitting the limit price, reflecting the market dynamics and preventing execution at unfavorable prices. This structure is crucial for ensuring proper risk management and execution strategy in volatile markets.