I just learned in detail about a rather interesting product in Vietnam’s stock market that not everyone knows about—covered warrants. Honestly, at first I was also pretty confused about what covered warrants are and how they differ from other products like options or regular stocks.

Simply put, covered warrants are a type of security that lets you buy or sell an underlying stock at a predetermined price, and you only have this right until the expiration date. The good part is that you don’t actually need to own that stock—only the price difference is settled in cash. If we compare what covered warrants are versus other products, they offer higher leverage than regular stocks, but they come with no voting rights or dividends like stocks do.

In Vietnam’s market today, the covered warrants traded are mainly covered warrants with collateral (Covered warrant) issued by securities companies. I’ve noticed this market is still fairly new, but there are already around 110 tickers listed on the exchange. Common covered warrant tickers are often based on large stocks such as ACB, FPT, HPG, MBB, or MWG—companies you’ll likely have heard of.

The great thing about covered warrants is that their prices are quite low; the minimum trading volume is only 10 units, so they’re easier to access than regular stocks. For example, if you buy ACB stock, you need a fairly large amount of capital, but if you buy an ACB covered warrant (for example, CACB2102), you only need to put in about 1,500 VND per unit while still benefiting more if the underlying stock’s price goes up.

But to be straight with you, covered warrants are what they are—high risk. If you don’t manage the timing well and the underlying stock price doesn’t reach the break-even point by the expiration date, you’ll lose all of your invested capital. I’ve seen many people chase high profits without calculating carefully, and then end up taking heavy stop-loss losses.

My experience is that you should only get involved in covered warrants when you genuinely believe the market will rise, and you need to choose underlying stocks from good companies. In addition, pay attention to the last trading day and the expiration date—don’t leave things to the last minute and end up being caught off guard. I usually allocate about 10–20% of my capital to covered warrants, and put the rest into other products to reduce risk.

If you’re new and don’t fully understand what covered warrants are, I recommend learning thoroughly about how they work, how to calculate profit and loss, and the legal regulations in Vietnam before you start trading. The covered warrants market has opportunities, but it is also full of challenges.