Trading Risk and Fundamental Risk correct, specific, substitute, partially, solution

NakedPuts

This is about Practice problem EOC for Reading 13 page 93.

Drives me nuts when the authors used by CFAI come up with names for risks.

(1)
Solution on page book 2 page 93 says "trading risk" is a chronic inefficiency hard to exploit. What on earth is "trading risk"?

(2)
Same solution seems to suggest economist in the case is correct when he says "fundamental risk is made partially better by shorting a substitute stock" I thought fundamental risk is "specific/idiosynchratic risk" of a stock and can't be diversified away. Can someone look at this CFAI practice problem?