B-S => Black and Scholes worldderman/kani/dupire => loc vol calibrationmercurio => vanna volgaHagan =>sabrheston => stoch volwystup => fxrebonato => for a good rounduptaleb => dynamic hedging

2 pieces of work come into mind:hagan with sabrroger lee with his work on moments of rr/flies

i think variance is much more important that the concept of volatility (esp if u are doing exotics)implied vols are just a juicer which gets rid of the confusion of the accuracy of prices in the vanilla world.

<t>to me:calibration is about having a model with a decent number of freedoms to play withthen throw in the prices of the tradable instruments which u need to hedge withblend them all in the juicer and adjust the parameters such that it is all consistentend of the day, u get a juicer such that u dun...

i find the implementation via dupire's paper (using prices) to be very unstablegatheral's recommendation in his book is much better (at least for me)

Hull White should be the better model (as what u mentioned in the mean reversion)industrywise the H-W 2 factor model seems to be a popular one, but i think the BGM is the one most big boys are using (or trying to use i guess)

that was a great ans, randomness.

hi richbrad, i am currently a new options traderlooking for more knowledge on the techniques of hedging, as well as a more detailed description of the further greeks i.e. vanna, volga, revga, bufga, vega hedging etcany recommended books will be very useful indeed.thks a mil brad.

richbrad, mind if u recommend the books that u like?finished Taleb's "dynamic hedging", but frankly, i am still fudged quite a fair bit.thks a mil.