In the Black-Scholes option pricing model, the only variable that is not directly observable is the volatility of the stock. In practice, an implied volatility is often calculated. To do this, we take all of the observable variables including the option price, plug them into Black-Scholes, and solve for the standard deviation that gives us the current option price. Doing this calculation directly is not possible. You must use trial and error, or a computer program.
As you can imagine, when company specific news is expected in the future, the implied volatility rises. One announcement that can cause a large swing in the stock price is earnings. It is fairly common for the implied volatility to rise when a company's earnings announcement draws near. In this video, Dan Passarelli discusses the implied volatility of HP's options near the company's earnings announcement, as well as option trading strategies for HP stock. Note, the option trading strategies he discusses are fairly advanced.
