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3 plays on rocky biotechnology sector

Despite some shakiness in the last month, the biotech sector offers some strong opportunities for investors, CNBC "Fast Money" traders said Tuesday.

The Nasdaq Biotechnology Index has slipped more than 7 percent in the last month. But trader Steve Grasso said that weakness increases upside for the iShares Nasdaq Biotechnology ETF.

Even after a rocky month, the fund is up about 21 percent this year. Grasso urged caution, though, as uncertainty in stock markets can hit high-valuation sectors like biotech quickly.

Pfizer headquarters in New York.
Getty Images
Pfizer headquarters in New York.

Trader Pete Najarian contended that big pharmaceutical companies offer the best way to play the space. He looked to Bristol-Myers Squibb, which has climbed nearly 9 percent this year.

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The company has gradually taken on more characteristics of a biotech than pharmaceutical name, Najarian noted.

Pfizer could have more upside, even after a 14 percent gain so far this year, trader Tim Seymour added. He noted it offers value in a sector where many stocks seem overvalued.

Disclosures:

Tim Seymour

Tim Seymour is long AAPL, T, BAC, DIS, F, GE, GM, GOOGL, INTC, JPM, LGF, Tim's firm is long BABA, BIDU, MCD, NKE, NOK, SBUX, YHOO.

Pete Najarian

Long AMAT, AAPL, BAC, BMY, BP, CSX, DISCA, DKS, FOXA, GE, KKR, KO, LLY, MRK, PEP, PFE, he is long calls AAPL, ABX, AMKR, BBY, BEE, BHP, CRM, CSX, CY, DAL, DVN, ETFC, EXC, FB, GILD, HIG, LC, LM, LULU, MU, P, PG, PNR, RAD, RF, SYY, UAL, UPS, VLO, VZ, WFC, WYNN, XLF, VLO, ZIOP, he is long puts AUY, CTL, FCX, RIG. Today he bought GILD calls.

Steve Grasso

Grasso is long AAPL, BA, BAC, CC, DD, DECK, EVGN, FIT, KBH, MJNA, MU, PFE, PHM, T, TWTR, GDX. His kids are long EFA, EFG, EWJ, IJR, SPY. His firm and some of its partners are long DVN, AMZN, NE, NEM, OXY, RIG, TSE, VALE

Karen Finerman

Karen is long BABA, BAC, C, FINL, FL, GILD, GOOG, GOOGL, JPM, KORS, M, BABA puts, she is short SPY, Her firm is long ANTM, AAPL, BAC, C, DIS, FBT, FINL, FL, GOOG, GOOGL, GPS, IBB, JPM, KORS, M, SUNE, URI, XBI, KORS call spreads, SUNE call spreads, KORS puts, SUNE puts, her firm is short IWM, SPY, MDY, Karen Finerman is on the board of GrafTech International.