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How to trade the riskiest stock out there

Lumber Liquidators
Mike Blake | Reuters

On a weak day for the markets Wednesday, one of the year's worst performers proved to be a bright spot.

Lumber Liquidators was up more than 10 percent and traded 57,000 options contracts. That might not seem like a lot compared to the Apples and Facebooks of the world, but it is substantially more than its much larger home improvement store peers Home Depot and Lowe's.

The reason for all this activity is part of the continuing saga that began when a report on the CBS program "60 Minutes" said the company's Chinese-made laminate flooring contains high levels of formaldehyde, a known carcinogen, and violates the California Air Resources Board (more commonly known as CARB) standards for composite wood products.

This week the Consumer Product Safety Commission had a call regarding its investigation into Lumber Liquidators. The probe, which is in cooperation with the EPA, the CDC, the NIH and the FTC (among others) will ultimately help determine whether these concerns are overblown, or could lead to a recall or worse.

Wednesday's bullishness shrugs off efforts by politicians to make hay with this story and focused instead on the CPSC's comments that this investigation will take months not weeks. It would seem that investors believe that time may be on their side.