Biotech stocks are tracking for their best quarter ever — here's how to play it

Biotech stocks took a tumble on Monday with the XBI S&P biotech ETF and IBB Nasdaq biotech ETF each falling by more than 1 percent.

"If you're playing biotech, you're counting on little companies doing something amazing and hopefully getting bought by a big company," Nadig said on CNBC's"ETF Edge" on Monday."We saw that in the last couple of weeks when Spark Therapeutics got bought by Roche, that was a significant position in XBI. It's barely in IBB."

To Ben Johnson, director of global ETF research at Morningstar, the equal-weighted XBI ETF offers big returns, but volatility in the biotech segment means investors need to have a strong stomach.

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