# Please explain Heston Model parameters meaning [closed]

The Heston Model is given by:

$$dS_t = \mu S_t dt + \sqrt{v_t}S_tdB_{1t}$$ $$dv_t = \kappa(\theta - v_t)dt + \xi \sqrt{v_t}dB_{2t}$$.

The parameters are:

$$\theta$$ is the long term variance

$$\kappa$$ is the rate at which $$v_t$$ reverts to $$\theta$$

$$\xi$$ is the volatility of the volatility

Can anyone explain what these 3 parameters mean in simple terms? Also, how are these parameters calculated in practice?

## closed as unclear what you're asking by noob2, skoestlmeier, AdB, LocalVolatility, amdoptMay 6 at 18:19

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