Does the soil drain well? That should probably be your biggest concern.

I assume the soil has poor drainage due to the clay content. I have hard packed clay soil in my yard and I planted my trees on a mound and everything is growing nicely so far. I amended about 1/3 of the soil with a mixture of compost and top soil. Compost will decompose after some time and your plant will drop down so be sure to plant it several inches higher than where you want it to be in a couple years. The organic amendments in Topsoil will also decompose and cause your plant to drop but there are also inorganic ingredients in Topsoil that will not decompose. I highly recommend planting on a mound.

I have heard that Mango trees thrive in poor soil but I preper to add some organic materials into my planting mounds so that water will sink into the soil. If you plant on a mound of only native clay soil, water will run off the mound. If you plant on a properly constructed mound, there is little worry of overwatering.
Simon

Yeah, I like ALL of Simon Grow's advice or even your option #1, though I think you definitely need to mix in at least half of the red clay soil to whatever you mix together. Actually, 4-5 shovelfuls of sand or perlite mixed in wouldn't hurt at all, because of the assumed slow assumed of clay soil, and might be the best thing this tree gets.......

MangoD