To build a term structure I need different volatilities; as I don't get them at every strike, I use interpolation technique to calculate the rest and plot. This is how I calculate the implied vols. How is the Newton-Raphson method used to calculate the implied vols? Is it another way to calculate like I calculate with interpolation techniques? Is my understanding correct? Now what ae actual vols and how are they calculated?
Edit: Basically I want to understand how the Newton-Raphson method is used to calculate to implied volatility and what is the difference between the Newton-Raphson method and interpolation methods?
What is the difference between implied volatility and actual/local volatility?