Covered Warrants (CW) are securities with collateral issued by a securities company. They allow the owner to buy (Calls) or sell (Puts) underlying securities at a predetermined price at or before a predetermined future time.

Covered warrants exist in two primary forms: a call or a put.

•  Buy CW (Call): a type of warrant in which the holder of a covered warrant has the right to buy an underlying security at the exercise price or receive the profit when the underlying security price is higher than the exercise price at the time of execution.
• Sell CW (Put): A covered warrant is a type of warrant in which the holder has the right to buy an underlying security at the exercise price or receive a profit when the cost of the underlying security is lower than the exercise price at the time of execution.