What is the right course of action here?

Waiting is correct (answer 1) because when you turn (here, you want to turn left), you must give way to traffic that goes straight ahead on the road you are turning into or crossing. That includes cyclists: they are treated as normal road traffic and have priority if your turning movement would cut across their path.

Taking priority before the cyclist would be wrong because a left turn is one of the highest-risk maneuvers and German rules require you to avoid endangering or obstructing straight-ahead traffic. Only when the cyclist has clearly passed and your turn can be completed without forcing them to brake may you go.

Sounding the horn is not the right action here. In Germany the horn is basically only for warning in immediate danger, not to claim priority or “make someone move.” Here there is no need to create pressure; you simply wait, watch for the cyclist’s direction and possible hand signal, then turn when it’s clear.