What is the right course of action in this situation?

Your selected answer is correct because according to German traffic rules, when a tram stops or is about to stop at a tram stop, you must remain behind it and not overtake it. This is to protect passengers who may be boarding or alighting, ensuring their safety. Overtaking a tram at or near a tram stop, especially on the left side, is generally prohibited and dangerous because passengers may step onto the road unexpectedly. Staying behind the tram means you can react safely to any pedestrians and comply with § 20 of the German Road Traffic Regulations (StVO), which requires special caution near trams and tram stops. In summary, always wait behind the tram in such situations to prioritize pedestrian safety and obey traffic laws.