Imagine you have a well‑tuned car engine—your option pricing model—but you haven’t set its fuel mixture, timing, or idle speed. Without those settings, it won’t run properly. Calibration is exactly that tuning process: we adjust the model’s knobs (its parameters) so that the prices it produces match the real prices traders are quoting in the market. Done well, this gives us a reliable tool for pricing, hedging, and risk management. Done poorly, the model becomes unreliable and breaks when market conditions shift.