I am new to the stop limit order. I want to set a stop limit order so that when my the premium of my long call option drops to a certain level, the system will automatically sell it.
For example, the premium for the AAPL option is 20 dollars right now. When it drops to 10 dollars, I want the sell order to be triggered. So, I set the stop price to 10 dollars.
However, how should I set the limit price? Like, how far away should the limit price be from the stop price? In my example, should I set the limit price to 9.5 or 9?
I tried in Interactive Broker, but the system told me the limit price cannot be too far from the stop price. I don't know how far is too far. That is why I am asking.