The correct option is 3. Islam encourages dressing modestly.
Islam does not order a specific dress for the people, but accepts in the dress every popular cultural manifestation that fulfills the objectives of dressing, without abuses, excesses or extravagances.
Mohammed wore the same clothes that his people wore in his time, and thus he did not order or prohibit dressing in a concrete way, but he prohibited certain harmful characteristics in clothing; that is why in Islam the principle of legality in dress is a norm, and the prohibition is an exception that must be proved with sacred texts.