B) they shake each other's hand
The verb in this sentence,"se dan", comes from "darse", which is a reciprocal verb (verbo recíproco) and these verbs always talk about something that the speakers are mutually doing, so the other options wouldn't be correct because: 1) They aren't referring to the 3rd person of plural, 2) They aren't doing a reciprocated action.
Hope this helped you :)