Meme stocks have been making a resurgence in recent weeks. Bed Bath & Beyond and AMC Entertainment Holdings, for instance, have experienced significant volatility of late, surging in value only to end up crashing. Meme stocks are a bit of a roller coaster for investors, and they can lead to extreme profits or extreme losses, depending on when you happen to buy.

One stock that has been showing signs that it could be the next big meme stock is SIGA Technologies (SIGA 1.34%). It has been incredibly volatile of late and may remain so over the weeks and months ahead, and here's why.

Siga has been rising due to its monkeypox treatment

The current monkeypox outbreak is the latest global health emergency. There are more than 41,000 cases of the illness for the year as of Aug. 22, and it is in more than 90 countries. It hasn't been declared a pandemic the way COVID was a few years ago, but fears are certainly elevated.

One reason shares of Siga have soared more than 200% this year is that the company has a treatment, Tpoxx, that the Centers for Disease Control and Prevention has made available to treat monkeypox under "compassionate use." Under compassionate use, patients can access an investigational medical product that isn't approved, provided that they can meet multiple conditions, including that they have a serious disease or condition, there isn't a suitable treatment available, the benefits justify any risks, and the patient can't enroll in a clinical trial.

The Food and Drug Administration (FDA) hasn't fully approved any treatments for monkeypox, and so even this limited approval for Tpoxx has given the companya big advantage. Danish biotech company Bavarian Nordic does have a vaccine, Jynneos, that the FDA has cleared for Emergency Use Authorization in high-risk individuals. But the problem is that supplies are limited and the U.S. government is stretching the doses into fifths by using intradermal injections, which go under the skin, so that it can administer the vaccine to more people. In the meantime, as case numbers continue to rise, people will need a treatment like Tpoxx.

The FDA approved Tpoxx to treat smallpox back in 2018, and so far the main reason for countries to buy it has been to have it on hand in the case of bioterrorism involving that disease. But the treatment is effective against monkeypox as well, and cases have been rising, accelerating demand for Tpoxx. Retail investors have been buying up the stock, hoping to cash in on stronger sales numbers. Investors may even be hoping that Siga becomes the next Moderna

Trading volume is up significantly

Not only has Siga's share price been rising, but its trading volume is also significantly higher.

SIGA 30-Day Average Daily Volume Chart

SIGA 30-Day Average Daily Volume data by YCharts

At the start of the year, it was common to see fewer than 200,000 shares of the stock change hands each day. Now, however, daily volumes are often 5 million or more. The drastic increase suggests significant momentum behind the stock and that it has become extremely popular with retail investors.

Short interest is also up

Another common feature of meme stocks is high short interest, which means many other investors are betting the stock will fail.

SIGA Percent of Float Short Chart

SIGA Percent of Float Short data by YCharts

A high short interest can potentially lead to a short squeeze down the road, especially if the business does well and proves the naysayers wrong.

Is Siga too dangerous to invest in?

Siga's sales rose 92% year over year to $16.7 million for the period ending June 30 after an influx of orders for Tpoxx.

The challenge is guessing how long this trend will last, as investors are effectively betting on how much of a problem monkeypox will be for the world. If it becomes another COVID, the healthcare stock could end up following in the footsteps of Moderna. However, if monkeypox proves more controllable and less dangerous, shares of Siga could end up falling soon.

For most investors, the stock is likely too risky to take a chance on today. Unless you have an extremely high risk tolerance and are comfortable with significant volatility, this isn't a stock you should consider adding to your portfolio.