I wonder why 430 calls (not 420?) exp dec were most bought. They must be expecting a massive squeeze. I remember there were some earlier posts today about the call spread being really out of whack. Obviously something going on
So this is how Bloomberg characterized the position:
While the amounts involved are small -- about 3,000 options worth $1.3 million changed hands -- it suggests at least some investors see a chance for Tesla to shake off its recent difficulties.
3,000 call options represent 300,000 shares worth $129m at $430 price levels - and any profits (and market effects) will scale with that position size, not with the initial purchase price of $1.3m.
Regarding the $430 strike price: if what you speculate on is a larger short squeeze then what you want is maximum leverage. The 2018 Dec $430 strike price options were sold at a price of about $4.3, while the $420 would have cost about ~$6, reducing leverage by 30-40%.
If you want to maximize the return on a large short squeeze then the $470-ish strike price is better, it will lever up 2x-3x more than $430 or $420.
A $430 call could still be used to break even if there's no short squeeze but if the $420 buyout materializes: if there are price spikes to above $434 - which is not unreasonable to expect even if a short squeeze does not materialize, as shorts will be covering out of phase with institutional investors selling their stakes in Tesla.
But also note that buying ~300,000 shares worth of call options could also be a protective hedge for a 300k shares short position, to cap short position losses at $430.