# SABR Model

*Quant & Pricing — Finicade finance glossary*

SABR is the market-standard model for interest-rate smiles, with four parameters controlling level, backbone, volatility of volatility and correlation.

SABR is the market-standard model for interest-rate smiles, with four intuitive parameters controlling level, backbone, volatility of volatility and correlation. Its dominance comes from a closed-form approximation that converts parameters straight into implied volatility, so a trader can fit a smile in milliseconds. The approximation degrades at very low or negative rates, which forced the shifted and normal variants now used across rates desks.

**Also known as:** SABR, stochastic alpha beta rho

**Related terms:** [Volatility Smile](https://finicade.com/glossary/volatility-smile-skew), [Implied Volatility](https://finicade.com/glossary/implied-volatility), [Stochastic Volatility](https://finicade.com/glossary/stochastic-volatility), [Swaption](https://finicade.com/glossary/swaption), [Model Calibration](https://finicade.com/glossary/model-calibration)

**Taught in:** Quant Quest — Numéraires & Rate Options

Source: https://finicade.com/glossary/sabr-model