Implied volatility is really the standard deviation of the price over time. You can calculate it by look at prices in the market. Then interpolate values. Where banks get funky is that the market for options go out about 3 years, but a banks will write options going out much much further. For those options, they are really just guessing, no matter how much fancy math they do, it's all to dress up a guess. And the traders don't care since they won't be around when the option expires