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Stock market averages are little changed following a round of mixed economic news Thursday. A report on GDP released early showed the economy growing at a 1.8 percent annual rate in the first quarter. While not stellar, the headline number was slightly better than the 1.7 percent increase that economists had predicted. On the other hand, the latest jobless claims data disappointed. Filings for jobless benefits increased by 25,000 last week. Economists were expecting a decline of 14,000. Adding to the confusion was Pending Homes Sales numbers that showed an increase of 5.1 percent in March. Economists were expecting a more modest rise of 1.7 percent. At the end of the day, however, the economic news failed to stir much of a reaction in the equity market. Earnings news was equally mixed. P&G (NYSE:PG) edged up and is one of 20 Dow stocks in positive territory in afternoon action after the consumer products company reported an 11 percent increase in quarterly profits. Sprint (NYSE:S) and Pulte Homes (NYSE:PHM) are also trading higher after both companies lost less money than analysts feared. Baidu.com (NASDAQ:BIDU) and Akamai (NASDAQ:AKAM) are down on disappointing news. Microsoft (NASDAQ:MSFT) reports after the closing bell. The Dow Jones Industrial Average is up 51 points, but the tech-heavy NASDQ is fractionally lower. The CBOE Volatility Index (.VIX) is down another .81 to 14.54 and on pace to set a closing low not seen since mid-2007. Trading in the options market is running about the typical levels, with 8.4 million calls and 6.4 million puts traded so far.

Bullish Flow

Microsoft is seeing brisk trading ahead of earnings. Shares are up 28 cents to $26.66 and 426,000 options have traded in the software giant so far today. The volume consists of 291,000 calls and 135,000 puts. It seems clear that investors are leaning on the bullish side of the trade ahead of the report. May 27 calls are 1.2 percent OTM and have traded 61,000 contracts. The Weekly $27 calls, which come off the board tomorrow, are the next most actives. 47,690 contracts have changed hands. Open interest is 9,581 and the option has a delta of .40. The Weekly and May 26 calls are seeing heavy trading as well. When earnings are released after the closing bell today, analysts expect Microsoft to post a quarterly profit of 56 cents per share on $16.2 billion in revenues. Implied volatility in Microsoft options is up 3.5 percent to 25 ahead of the results.

Bullish pre-earnings action in Oclaro (NASDAQ:OCLR). Shares of the San Jose, CA optical component maker are up 4 cents to $11.80 and 6,750 calls traded in the name, which is 12X the typical volume and 10X the day's put activity. The top trade is 743-contract lot of May 12.5 calls at the 60-cent asking price. The next is 613 May 12.5 calls at 60 cents. Both are opening buyers, according to ISEE data. 4,325 now traded. Jun 12.5 and Jul 17.5 calls are seeing interest as well. The company is due to release results after the closing bell. OCLR tumbled 18.6 percent on March 9 after peer Finisar posted disappointing earnings. It continued falling, losing another 24.6 percent through April 19, but is on a six-day 15.7 percent winning streak since that time.

Bearish Flow

Officemax (NYSE:OMX) sees early options action. Shares are down $1.94 to $10.55 after the company reported earnings of 13 cents per share, which was 14 cents less than Street estimates. The top options trade is a 1335-contract block of Aug 9 puts at the 35-cent asking price. 5,546 vs. 1,144 in open interest. With 85 percent of the volume trading at the ask, it appears that buyers are taking positions and bracing for further losses in OMX in the months ahead. May $11 calls, wihich have traded 1267 contracts, are possibly seeing opening buyers as well.

Implied volatility Mover

Sprint shares hit a high of $5.10 this morning and are up 22 cents to $5.01 after the company reported a quarterly loss of 15 cents per share, which was not as bad as the 22-cent loss that was expected. Revenues topped expectations. Shares are up and one investor seized the strength to sell 29,000 Aug 5.5 calls at 24 cents per contract. It might be a giant overwrite on the strength. A block of 1.37 million shares traded at $4.96 within 20 minutes of the call write. Aug 5.5 calls are 9.8 percent out-of-the-money with a delta of .37. 30,980 now traded vs. 35,266 in open interest. May 5 and 6 calls are seeing interest as well, with 15,640 and 5,310 traded, respectively, and more than 80 percent traded on the bid. Implied volatility is down 18 percent to 35.

Source: Thursday Options Recap