Warren Buffet Derivative Tips to Make Money

2. Warren Buffet  feels that to get out of a derivatives contract is very difficult.

3. Derivative trades facilitates the biggest frauds in the system.

4. Non Symmetrical errors occur in derivatives business.

5. Derivatives can exacerbate trouble that a corporation has run into for completely unrelated reasons. This pile-on effect occurs because many derivatives contracts require that a company suffering a credit downgrade immediately supply collateral to counterparties.

6. Company’s derivatives instantly kick in with their requirement, imposing an unexpected and an enormous demand for cash collateral on the company.

7.  Derivatives demand that one has to be aware of the macro picture as it sometimes carry large amount of risk.