This morning US equity futures are modestly higher after a sharp sell off yesterday on better than expected earnings from Visa and Facebook and a good PMI in China. Later today new home sales will be released and there will be a Fed announcement. Typically the market is quiet leading into a Fed announcement with sharp moves coming after. No policy changes are expected to be announced today.
Although the call sold in this trade is 16% out of the money, it is still a very risky sale. A short call has unlimited upside risk, and it is not uncommon for the VIX to make sharp moves upward. Therefore I prefer to keep my risk fixed and defined by buying a further out of the money call when making these types of trades.