What is the right course of action here?

Your choice 1 and 2 is correct.

The key rule here is “priority road”: the yellow diamond sign means you are on the priority road, and the small additional sign shows that the priority road bends to the right. So even though you are turning left, you are still following the course of the priority road. Vehicles coming from the side roads must yield to traffic on the priority road.

That’s why you may proceed ahead of the red car: the red car is coming from a side road and has to give way to traffic on the priority road, even if you are changing direction.

For the same reason, the yellow car may also proceed ahead of the red car: the yellow car is also approaching from a side road, but the red car is in an even “lower-priority” position here because both you and the yellow car are on/connected to the priority flow compared to the red car’s approach. The red car must wait until traffic with priority has passed.

What is not allowed is going ahead of the yellow car: the yellow car does not have to yield to you just because you are on the priority road; you still must watch for other vehicles that can proceed without yielding to you in this layout. In similar questions, first identify the priority road and its direction via the additional sign, and then remember: traffic from side roads yields to all traffic that follows the priority road’s course.