> java --source 7 Test.java
warning: [options] source value 7 is obsolete and will be removed in a future release
warning: [options] target value 7 is obsolete and will be removed in a future release
warning: [options] To suppress warnings about obsolete options, use -Xlint:-options.
3 warnings

java --source 7 -Xlint:-options Test.java
Unrecognized option: -Xlint:-options
Error: Could not create the Java Virtual Machine.
Error: A fatal exception has occurred. Program will exit.

It seems the obsoletion warning comes from the javac part of the code and it assumes you are executing the javac launcher.