Model Calibration
Also called: calibration, calibrating a model, fitting a model
Calibration is choosing model parameters so the model reproduces prices actually observed in the market, rather than estimating them from history. It's the defining discipline of derivatives pricing: a model that misprices liquid vanillas cannot be trusted on the exotic it was built for. The recurring danger is overfitting — a model flexible enough to match every quote today often extrapolates badly tomorrow.
Where this is taught
Definitions are the trailer. These free levels turn Model Calibration into something you play — one bite-size lesson, with worked examples, a quiz and XP.