Norbert gambit versus a cash FX fee: which leaves more US dollars
Two share trades with fixed commissions, or a percent on the cash. Enter your own numbers and see which one costs less.
How it works: the gambit buys whole shares in Canadian dollars, then sells the same shares in US dollars. You pay two commissions and the gap between the two share prices. The cash route converts the same Canadian dollars at the mid rate plus your broker's percent. Both routes start from the same C$ spent, so the US dollars you end with can be compared. Share prices, commissions and the percent are your own numbers.
Fixed fees against a percent
Two commissions cost the same on any size. A percent grows with the amount. On a small amount, the commissions win and the cash route is cheaper. On a large amount, the percent wins and the gambit is cheaper. The steps are in Norbert's gambit before selling US options.
What the math leaves out
The shares are held for a day or more while the money moves. The rate can change in that time. This page uses one rate for both routes. See the CAD to buy US calculator.
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