It is a matter of personal preference. Most exchanges allow stop-loss orders in options.
Check with your broker to see if they accept these types of orders. Once triggered, the stop order can be of two different types: a market order or a limit order. Make this decision based personal preferences.
Basically, anyone who trades that product plays a role in the market width. However, there are rules on each exchange regarding the maximum width that quotes may be. The maximum bid-ask differentials are the same at exchanges that trade options. There are occasions and market situations at the exchanges that may necessitate modification or waiver of the maximum bid-ask differentials.
The U.S. exchanges that list options have rules that specify the maximum bid-ask differentials in option contracts. The members of these exchanges are obligated, under normal circumstances, to honor their displayed quote for a minimum number of contracts. The number of contracts can vary, depending on the stock or index in question, and could be 1, 10, 20, 50 or even 250 contracts.
In general, the market or displayed bid/ask spread could be composed of any variety of participants including market makers, institutional investors or private investors.
It is unlikely that open interest will affect executions as much as the bid or ask side does. Open interest is simply the number of outstanding contracts. It expands and contracts as investors and traders open and close positions. If you enter a market sell order, you will be filled at the best available bid price. If the quantity at that bid price is less than your order size, then you'll sell the number of contracts on that bid and the balance of your order at the next-best bid price, and so on.
If you believe the market would have problems digesting a certain quantity of contracts, it might be appropriate to spread that quantity out over the course of the trading day. If you're worried about the price you will receive upon entering a market order, consider using a limit order, where the limit is the lowest price you will accept.
During times of extreme market volatility, it is imperative for investors and their brokers to fully understand the risks of entering market orders. A market order is more time-sensitive than price-sensitive. If an investor enters an order at-the-market, especially a large order, there may be a chance that the market for that security will change quickly once they submit the order to the marketplace.
Furthermore, investors should use extreme caution when entering market orders prior to the opening or closing of the markets. Investors should understand the parameters of the orders they submit as prices can change rapidly especially at market open.