Inversions take place when a company completes a transaction, then changes its tax address to an overseas location to potentially reduce tax rates. When Ireland-based Allergan and New York City-based Pfizer confirmed they were in talks in recent weeks, it raised questions about a potential inversion.
If Pfizer falls to a cheaper entry point, it may not need a merger to rally, said trader Dan Nathan.
"I think you buy Pfizer no matter what happens," he said.
Trader Brian Kelly added that Pfizer seems appealing more for its dividend yield than anything else. Investors could also look into Allergan on its "ability to do well alone," said trader Guy Adami.
Leading insurance company UnitedHealth said on Thursday it expects to take big losses on its Affordable Care Act health plans, and it's pulling back on marketing 2016 plans. Its shares closed more than 5 percent lower, and trader Karen Finerman contended the selling was "overdone."
Trader Dan Nathan sees more pain for health care stocks ahead and believes the Health Care Select Sector SPDR Fund could see a short-term dip.
Long TWTR & Long March Risk Reversal, Long EEM Dec 35/32 Put Spread, Long IWM Dec Put Spread, Long XOM Nov Put Spread, Long XLU Dec Call Spread, Long PYPL Jan Risk Reversal, Long M Jan16 52.50 / 62.50 call spread, Long INTC Dec Put Spread, Long XLF Dec put spread, NTAP call spread
Brian Kelly is long BBRY, GDX calls, GLD, Bitcoin, Hong Kong Dollar, US Dollar; he is short Yuan, British Pound, Candaian Dollar, Euro, GSG, Swiss Franc, Yen, EEM, EWC, EWH, EWU, EWG, SPY
Karen is long BAC, C, FL, GOOG, GOOGL, JPM, KORS, KORS call spreads, M, SEDG, URI, she is short SPY, Her firm is long ANTM, AAPL, BAC, C, DIS, DIS puts, FL, FL calls, GOOG, GOOGL, GPS, JPM, KORS, KORS call spreads, MA, URI, URI long puts, WFM, her firm is short IWM, SPY, MDY, USO, XRT, Karen Finerman is on the board of GrafTech International.
Guy Adami is long CELG, EXAS, INTC, Guy Adami's wife, Linda Snow, works at Merck.
— CNBC's Dan Mangan contributed to this report