How is nitric oxide formed and how does it induces smooth muscle relaxation?

Nitric oxide (NO) is produced from the amino acid L-arginine by the enzymatic action of nitric oxide synthase (NOS), present in many mammalian tissues. Co-factors for NOS include: oxygen, NADPH, tetrahydrobiopterin and flavin adenine nucleotides. Under normal, basal conditions in blood vessels, NO is continually being produced by cNOS. The activity of cNOS is calcium-and calmodulin-dependent.
When NO forms, it has a half-life of only a few seconds, in large part because superoxide anion has a higher affinity for NO.
NO avidly binds to the heme moiety of hemoglobin (in RBCs) and in the heme moiety of the enzyme guanylyl cyclase, which is found in vascular smooth muscle cells. Therefore, when NO is formed by vascular endothelium, it rapidly diffuses into the blood and subsequently broken down. It also diffuses into the vascular smooth muscle cells adjacent to the endothelium where it binds to and activates guanylyl cyclase. This enzyme catalyzes the dephosphorylation of GTP to cGMP, which serves as a second messenger for many important cellular functions, particularly for signaling smooth muscle relaxation.
cGMP induces smooth muscle relaxation by multiple mechanisms including:

1. increased intracellular cGMP, which inhibits calcium entry into the cell and decreases intracellular calcium concentrations.
2. Activates K+ channels, which leads to hyperpolarization and relaxation.
3. Stimulates a cGMP-dependent protein kinase that activates myosin light chain phosphatase, the enzyme that dephosphorylates myosin light chains, which leads to smooth muscle relaxation.