In the financial market, the pricing model of options usually uses implied volatility to estimate the price of options. Implicit volatility is the level of volatility that makes the option price calculated by pricing model match the option price observed in the actual market.

The calculation of implied volatility is usually obtained by reverse calculation. The common method is to use the option pricing model (such as Black-Scholes model or other volatility surface model), and get the implied volatility through iterative calculation by taking the option price observed in the market as a known quantity and other variables (including implied volatility) as unknown quantities.

The following are common steps to measure implied volatility:

Collect market data: firstly, collect the market quotation of options and the corresponding underlying asset price.

Choose the right option pricing model: according to the market situation and option characteristics, choose the right option pricing model, such as Black-Scholes model or other volatility surface models.

Back calculation: take the option price observed in the market as a known quantity and other variables (including implied volatility) as unknown quantities, and use the pricing model to make iterative calculation until the option price calculated by the model matches the price observed in the market.

Iterative process: by constantly adjusting the initial value of implied volatility, the pricing model is used to calculate and compare, and the option price observed by the market is gradually approached until it converges to the implied volatility that meets the error tolerance.