The watch could delete the unlock code when removed from you wrist.

You could further make it so that the phone would lock if unlocked by the watch, and it was removed from the immediate vicinity of the watch or the watch was removed from your wrist.

The big problem with this approach is the password. You need some sort of password on the watch to make it secure.

Now where is it going to be easier to enter a good, secure, password? A six inch phone? Or on a tiny watch screen?

It would be nice if my watch could unlock my phone I guess. But I have a hard time seeing how it would be more secure than the reverse that’s currently true.

At least until we get “WristID” that uses the pattern of blood vessels under where my watch sits on my wrist.

Good point. Have the phone password unlock the watch as well.

Basically the workflow could be "type password into phone after putting on watch, to unlock, then things just work until you take off the watch".