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Did Ackman break even on his Herbalife short? Don't bet on it

Several recent reports suggest billionaire investor Bill Ackman has done the unthinkable: break even on his Herbalife trade. But a closer look at the numbers indicates Ackman is still in the red on one of the most closely watched trades in Wall Street history.

The Herbalife saga started back in December 2012, when Ackman announced that his hedge fund, Pershing Square Capital Management, was betting against Herbalife by shorting more than $1 billion worth of the company's shares.

Jonathan Fickies and Patrick Fallon | Bloomberg | Getty Images

Let's generously say that Ackman started shorting when the stock was trading at $50 per share, which would mean that he shorted at least 20 million shares. Then a bunch of rival billionaires took contrasting views, Ackman brawled with Carl Icahn on CNBC and the stock soon soared to $80 a share, costing Ackman millions in paper losses—to say nothing of his bruised ego.

Fast forward to Oct. 2 , when Ackman cried the investment equivalent of "Uncle!" and released a shareholder letter in which he announced he reduced his short-equity position by 40 percent by buying a bunch of "over-the-counter put options." (For those who haven't been watching "Options Action," put options increase in value when a stock falls).

Read More Ackman takes aim at Herbalife for China dealings

This means that Ackman must have covered about 8 million shares at around $75, which is roughly where the stock was trading around the time of the letter. That would mean a loss of about $200 million (8 million times $25). Keep that number in mind. We'll revisit it later.

Now to the options part of Ackman's bearish trade.

In late January, a huge number of put contracts that expire in 2015 were bought. Ackman has never acknowledged that he was the buyer of those puts, but many options experts point the finger in the hedge fund manager's direction.

Specifically, most of the buying activity centered around put contracts that become valuable if Herbalife falls below $65, $60 and $50 by the end of January 2015. There are currently about 230,000 Herbalife put contracts that have been purchased in the January 2015 expiry.

If Ackman owned half of all the available put contracts that have been sold, and he booked a profit of $10 per contract, a very generous assumption given where Herbalife has been trading, he'd have a profit on the options part of his trade of about $115 million.

Now to the stock portion of his bearish trade. He covered 8 million of his short, so assuming he hasn't increased or decreased his position, he's still short about 12 million shares of Herbalife at about $50. The stock is trading today for $53. That's a paper loss of about $36 million.

Read More Ackman outspent by Herbalife in lobbying battle

So let's do the math one more time. He booked an initial loss of $200 million by closing out a portion of his stock short. He potentially has a paper gain from his options trade of $115 million. He still has $36 million in paper losses from the part of his short that he did not yet close. That leaves a remaining loss of about $121 million.

"It's almost impossible that Ackman scratched on this trade," commented Mike Khouw of Dash Financial.

A representative for Ackman declined to comment.

Additional reporting contributed by CNBC's Alex Rosenberg.

Follow "Options Action" on Twitter: @CNBCOptions.

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