Calculating stock volatility for use in options price model?

For those that understand how to calculate volatility of a stock for use in an options price calculator in the implied volatility field, I've got some questions about whether I'm doing it correctly.

If I understand correctly I calculate standard deviation of the underlying stock price over an annual basis and divide by the average price to get a percentage volatility figure? (is this first assumption correct?).

Secondly, if I calculate standard deviation over say 20 days, then to annualise it (say over 250 trading days) I do the following

if t = twenty day std dev

annualised sd = t * sqrt(250/20)

then annualised volatility = annualised sd/average price (or is it annualised sd/current price?)

I'm a bit confused - if anyone can answer directly or point to an article that describes the calculation well that would be very helpful.

Re: how to calc stock volatility for use in options price model

http://sigmaoptions.blogspot.com/2008/05/more-on-volatility.html

Re: how to calc stock volatility for use in options price model

Thanks Wayne - I'll have a read - I might still come back with some questions though