So the 3rd option would include the dividend in the backtest result & adjust the data to account for the dividend?
From Norgate:
Capital returns, special dividends/distributions and ordinary dividends are all adjusted for in the same way,as in the generic example below:
Closing Price = $100
Distribution = $10
Expected Opening Price = Closing Price – Distribution = $90
Adjustment Factor = $90/$100 = 0.9
All prices before the ex-date of the distribution are multiplied by 0.9
