S2000 - question re impact of stock options on CFO

S2000 - in the Investments forum, Palantir and I are discussing the impact of option grants and exercises on Amazon’s cash flows. I went back to CFA L2 FSA colume (reading 23 sections i and j in 2012 curriculum) but found no definitive answer.

To me it looks like options grant would increase CFO compared to NI since it’s a non-cash charge on the income statement. Options exercise would also increase some CF - maybe CFF since it is issuance of new shares. And options expense would reduce NI providing a tax benefit similar to the tax benefit provided by depreciation. Are any of these statements close to being right?


Yo S2000, how does the magician do this trick?

Tax deduction occurs on exercise of options and not for grant of options.


Don’t the companies expense options when they are granted? If they do, wouldn’t that decrease their net income and give them a tax benefit?

And what about cash flows - would exercise of options increase cash flow without affecting net income, or … ?