With everything else being equal, a higher Implied Volatility means higher option prices. This means that we can collect more money when we sell the options. However this doesn't necessarily mean that we should sell options every time that IV is high.
Today, Tom "TP" Preston and Tony Battista are joined by Dr. Data (Michael Rechenthin, Ph.D.) as they discuss how Implied Volatility is an input into the options model and how it is similar to the options price in a different form. To calculate IV, we use the Newton-Raphson method. It starts with a guess about what the IV might be, then runs an iterative process that uses theoretical value and the vega of the option based on that first guess to make another, better guess, for IV. With each iteration, the process gets closer and closer to the actual IV.
Check out the segment to get the skinny on how IV is calculated and how the vega of the options impacts the IV as well!
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