Herbalife Ltd. (NYSE:HLF - 41.11) is not only seeing heavy trading volume on news that Carl Icahn is buying 13% of the nutritional supplements company, but it is also a popular trade in the option pits. Overall option volume is nine times normal levels, and one individual investor has made a big bearish bet that the company will slide precipitously over the next few months.

The far out-of-the-money May 22.50 put is the most popular strike by far on the day, with more than 31,000 contracts crossing the tape. And the strike has seen one trade of 20,595 contracts alone. The vast majority (94%) of the total number of contracts went off at the ask price, and implied volatility has risen 3.1 percentage points, indicating that some of these were purchased to open. At a volume-weighted average price (VWAP) of $0.88, the stock needs to drop to $21.62 (strike less VWAP) by May's expiration date for the investors to break even. The current delta on the trade is negative 0.07, meaning the traders have a 7% chance of the stock finishing south of the strike price; otherwise, all the investors can lose is the premium paid.

Today's news drove HLF up more than 7% today, and the stock has been on a run overall since bottoming out in late December following news that well-known hedge fund manager Bill Ackman was shorting the stock. HLF has also gained roughly 25% year to date, and has more than made up the ground since hitting its annual low of $24.24 hit on Christmas Eve - the stock tumbled almost 43% in the four days following Ackman's actions. But since then, the stock has rallied as the market has been on the same side as Icahn.

Today's aggressive put buying aside, option-trading sentiment toward HLF is nothing out of the ordinary. The equity's Schaeffer's put/call open interest ratio (SOIR) stands at 1.19, showing a slight preference toward puts. But that is higher than just 55% of similar readings taken in the last 12 months. Also, the 50-day put/call volume ratio on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) is 0.96, again among the middle of similar readings in the last 12 months, at 46%.