Traders see money in this drug stock

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Options Action: Bullish bet on Pfizer

Investors are flocking to health care stocks.

The sector has already seen sky-high returns this past year, up more than 25 percent with companies like Regeneron Pharmaceuticals, Cigna and Edwards Lifesciences leading the rally, up a respective 87, 82 and 71 percent in the same period. But it's one of the sector's underperformers that sparked a flurry of bullish activity in the options market this week: Pfizer.

On Tuesday, when options call volume ran more than two times its daily average, and calls traded eight times more than puts, one options trader bet nearly $1 million that the stock could rally to multiyear highs in the next four months. Specifically, that trader purchased 10,000 of the October 35-strike calls for 76 cents each. Since buying a call option allows a trader to purchase a stock at a set price at a given time, this trade is profitable if Pfizer shares rise above $35.76 or 4 percent from current levels by October expiration. That's the highest level for the stock in more than a decade.

"This trade was unusual on a relatively light volume day, as it represents about a million shares of stock," options expert and CNBC Contributor Mike Khouw said Tuesday on CNBC's "Fast Money."

Khouw added that the trade could have been a result of an upgrade from Jefferies, who reaffirmed their buy rating Tuesday and added a $45 price target on the stock.

Of the 20 Wall Street analysts that cover Pfizer, the average rating is overweight with a price target of $37.74.