https://inflection-quant.pages.dev/tags/no-arbitrage/Recent content in No-Arbitrage on Inflection Quant LabHugoen-usFri, 26 Jun 2026 00:00:00 +0000https://inflection-quant.pages.dev/articles/quant-engineering/vol_surface_calibration/Fri, 26 Jun 2026 00:00:00 +0000https://inflection-quant.pages.dev/articles/quant-engineering/vol_surface_calibration/<h2 id="why-this-matters">Why This Matters</h2> <p>For vanilla options, the simple models are usually sufficient. A plain call or put can be priced off Black-Scholes directly; you often do not need to reach for local volatility or a stochastic volatility model. Those heavier models earn their place with exotics, where the payoff depends on how the smile behaves rather than just its level today. For a vanilla, you take the market&rsquo;s implied volatility at the relevant strike and maturity and feed it into Black-Scholes. But that assumes a volatility surface already exists: before Black-Scholes can price anything, the surface it reads from has to be built, and building it is less straightforward than it appears.</p>