What is the right course of action here?

In this situation, the traffic sign "Yield" (give way) with the additional sign indicating priority from the right means you must give priority to all vehicles coming from the right side at the upcoming intersection.

The motorbike is coming from your right, so it has the right of way. The yellow car, turning from a side street on your left, does not have priority.

Therefore, the motorbike may proceed first ahead of the yellow car, because it has the right of way from the right side. You may then proceed after the motorbike.

Option 3, where you go ahead of the motorbike, is incorrect because the motorbike has priority from the right and must be allowed to go first.

So both you and the motorbike can proceed ahead of the yellow car, but the motorbike must go before you. This respects the priority rules and the yield sign.