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Sometimes, when formulas are hard to understand, rearranging them according to one's own interpretation can make the economic meaning immediately apparent and easier to remember. While reading the paper "The Vanna-Volga Method for Implied Volatilities" by Castagna and Mercurio (2007), I noticed that the formulas in Derman's textbook "The Volatility Smile" also have this issue; they often present the formulas using the most basic parameters and rarely utilize intermediate parameters, which can be quite dizzying. One must take pen and paper or a computer to sort through the formulas to understand them.


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