The Bachelier model is a model that prices options by assuming that the value of the underlying itself, such as a forward rate, follows a normal distribution. Because the underlying can take values at or below zero, it is used to value interest rate options when rates are negative.
The Bachelier model (normal model) was presented by Louis Bachelier in 1900, and practitioners are said to often call it the normal model. Its volatility (normal volatility) is expressed as the size of the change in the rate and quoted in bp.
Its volatility σN is linked to the Black volatility σB by the approximation σN≈FσB, where F is the forward rate.