I dont use OLC, but I think that outside visual range is outside his visual range. If you play GWX2.0, on a really nice day he'll(merchant or warship) be able to spot you at 10-15km.
I would like to take a guess that:
1. Crystal clear day: 10-15km(depending on if you have 16km enabled)
2. Rough seas, good visibility: 8-10km
3. Rough seas, bad visibility: 2-3km, maybe less
of course, these valuse are less if it's at night.
edit: just make sure that youre barely able to see him, and I think that while youre flanking him, he wont be able to see you.
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