When a refinery buys a call option to lock in the price it will pay for crude oil (giving it the right to buy at a set price), or a power plant buys the right—but not the obligation—to sell electricity next month, they are using commodity options. These contracts are built on something that keeps changing: the underlying is usually a forward contract, not today’s spot price, and the volatility that determines the option’s value shifts with both time and strike. This chapter shows you how to price those options reliably, from the simple Black formula on a single forward to Monte Carlo simulations that capture the quirks of daily delivery periods.