All kids are different and require different approaches. Some children require extrinsic motivation and that's perfectly normal and okay. Extrinsic motivation done right can lead to intrinsic motivation. There's plenty of empirical-based research on the successful use of token economies and other behavioral approaches.
That said, Belle, as a professional, I would go with option 1. Always start with the least restrictive approach. Punishers should always be last resort. I do think that you may be setting yourself up for failure by having such a prescribed approach. What I mean is the more complicated the harder the plan is to follow consistently. I would try awarding tokens or points for a few appropriate behaviors you would like to increase. Do it frequently at first. Pair token with verbal praise, 1:1 attn, etc., and you should be able to fade token more quickly. Depending upon the number of tokens you think you think your son may earn I would have a low number to earn exchange of tokens. You may want to leave deciding what the reward will be up to your son (within reason) as choice and control are big issues at this age.
It's pretty much a behavioral rule of thumb that ignoring the unpleasant behavior goes along with rewarding good behavior. Also, consistency in whatever approach you do is important.
Best of luck!
