# What is “Lambda” in Heston's original paper on stochastic volatility models?

In his paper (link), he has the equations:

b1 = k + ƛ - (ρ * σ)

b2 = k + ƛ

k is the rate of mean reversion, ρ is the correlation between the two Wiener processes, σ is vol of vol, what is ƛ?

I have yet to figure out what ƛ is.

Thanks!

When volatility can change the "attitude" of investors to these changes becomes important for pricing options. This like/dislike for vol increases is captured in the parameter $$\lambda$$. In practice vol goes up i.e. $$dv$$ is positive, in bad economic times, such as recessions, when $$dC$$ is negative. So $$\lambda$$ is negative.