How to make a pesto in a mortar?
The fourth option is the correct one. The problem is that if you start with oil in the mortar, the pestle will slip and you will not be able to properly mash the rest.

What you usually do is:


Wash the basil in cold water. Put the leaves on a tea towel and leave them to dry (you can delicately pat them with another towel). You don't want extra water in the pesto, so be sure the leaves are dry before starting. Traditional pesto is made with Genovese basil.
Start with the garlic (traditionally Aglio di Vessalico) and a few grains of rock salt in the mortar. You would generally put 1-2 pips of garlic for ~50g basil leaves, but obviously that is up to your taste (if you were to make Provencal pistou you would probably go for a higher garlic to basil ratio). I generally remove the inner part of the garlic (the anima) before mashing it.
Now add the basil and mash them with a circular movement. You have to be quite delicate when doing this. You'll see a green liquid forming at the bottom of the mortar.
Now add pinenuts and/or the walnuts and finally the cheese. A mix of 36 months-aged Parmigiano Reggiano and pecorino (sardo or romano) is perfect for pesto.
Finally add the extra-virgin olive oil slowly, while mixing.
Put in clean pots, let it rest for half an hour, then if necessary cover with some extra oil.


Whether you do this in batches or all at once mainly depends on the size of the mortar and how much pesto you are making. If you are making a big amount or have a small mortar repeat the steps for every batch (I would wash the mortar each time, as it will be oily. Remember to dry it throughly before restarting).

Most informations taken from: http://www.mangiareinliguria.it/consorziopestogenovese/pestogenovese.php (in Italian)