Image optimization for SEO plays an important role in ranking of the site & also traffic. Some of the important steps in Image optimization are
1) use the Right sized image as it helps load the site faster
2) Use keyword rich alt text.
3) text surrounding the text should be also keyword rich as it helps search engines rank it easily.
4) Also png files should be used. GIF & JPEG takes more time to load & this may affect the ranking.
5) Also try to get links from external sites to the images. This helps in backlinks.
6) Providing a HTML embed code will help spread the images virally.