What Does Warren Buffett Really Think About Derivatives?

Warren Buffett once said derivatives are “financial weapons of mass destruction,” a statement that has been widely quoted and shared since the Oracle of Omaha declared his position on the subject in 2002.

Like so many of his statements, this declaration has been misused and misquoted.

One might think that based on this view, the Oracle avoids derivatives at all costs, but that is just not the case. He has used derivatives, specifically options to bet against the S&P 500. He has also used derivatives to trade oil, silver and the dollar in the past.

Not all derivatives are bad

Derivatives do have...