I wanted to start a conversation on what would be the "best" method to trade a short term bounce in a particular stock or index. In other words "Catch a Falling Knife" I'm speaking specifically of the August market selloff and and the recent one in January, but hopefully this can apply to individual stocks as well. In particular, we know timing the bottom is near impossible to do consistently, yes I know all about Technicals and Supports etc but let's assume we had no idea. Just that if market goes down 5% we want to trade a retracement and not get killed trying to catch a falling knife. I would assume our conversation will start with either calendars or butterfly's, with some positive delta. The exact location will vary depending on entry and each scenario so not much point in discussing that. Our duration will be probably be < 30 days. We know front month IV will rise relative to back month IV making calendars more interesting. We also know that IV will revert (esp in 30 day back month) so this would benefit the Butterfly more. A Longer term butterfly has more exposure to IV so since a bounce will have declining IV, should we put on a longer dated Bfly? I've tested calendars on individual stocks (CMG recently) with very short term near month (1-2 weeks) and very long back months (6-12 Months) and these perform well but have a good amount of delta exposure. And relatively speaking the 6m+ IV doesn't rise AS MUCH but it does still suffer. I'm sure there are scenarios where it could! I haven't looked at fly's in as much detail. So any thoughts? Any real life experiences?