# Is SABR being used in practice for Equity options

Just to be clear: By "in practice" I mean what the banks and other financial companies do.

Do financial companies use SABR for pricing equity options?

Consider a stock with price $$t$$ being: $$S_t$$. In SABR model we define the stock dynamics will be:

$$dS_t=S_t^{\beta}\sigma_tdW_t$$ and a process for the volatility. I believe it is not a very good practice to assume no drift for a stock. So that is why I have difficulty understanding how people can use SBAR in practice for Equity while it does make more sense to us it in FX for instance..

• Usually SABR is applied to the forward price of the underlying, so there is no drift. – Antoine Conze Feb 14 at 14:40
• Will you be so kind to elaborate? – Sanjay Feb 15 at 0:16
• Hi. would you clarify what's unclear ? – Antoine Conze Feb 15 at 14:11