What happened

Shares of Carvana (CVNA -0.36%) were moving higher again today as an ongoing short squeeze seemed to lift shares of the beaten-down online used car dealer for the second day in a row.

As of 10:22 a.m. ET, Carvana stock was up 26.8% on high-volume trading, following a 19.5% gain last Friday.

So what

Even before the first hour of trading was through this morning, more than 30 million Carvana shares had changed hands, above the average daily volume of 24 million over the last three months.

What was also notable about today's jump is that, unlike Friday's, it came as tech stocks pulled back, meaning the squeeze wasn't correlated with any specific market news or optimism about slowing interest rates or something similar.

With 89% of Carvana's float sold short, the company is a clear target for short sellers, but there seem to be enough bullish bets both on the stock and its call options to propel it higher. There also appears to be a gamma squeeze in the stock, brought about by aggressive buying in call options that forces market makers to adjust their positions, buying the stock as a hedge.  

Trading volume on the $10 strike Feb. 3 call options was already above 17,000, showing a high-level of interest in call bets on the stock as well.

Now what

Carvana's fundamentals haven't changed significantly in recent days, and the business is still under pressure from falling used car prices and its debt burden. Bankruptcy remains a real possibility as well.

However, the high short interest has set up an opportunity for traders, and Carvana could be becoming a meme stock, jumping on no-news short squeezes. Bed Bath & Beyond, another struggling consumer stock, also rose by double digits today for similar reasons.

A short squeeze isn't a reason to invest, but the activity could help provide a floor on the stock, and deter short sellers to some extent.

Expect Carvana stock to remain sensitive to macro-level news, including the Fed's rate hike decision later this week. With bankruptcy still on the table, however, a short squeeze isn't going to save the underlying business.