The correct option is C of the continous refraction of starlight by the Earth's atmosphere.
The twinkling of stars is due to atmospheric refraction of star-light. The physical conditions of the atmosphere keep on changing continuously due to which density of air in different layers of atmosphere also keeps on changing.
As a result of this, the refractive index of the various layers of atmosphere also keeps on changing continuously. So, light coming from stars suffers multiple refraction. This causes the direction of the ray coming from stars to change, consequently causing the shift in the position of the image of stars in random directions. Also, the amount of starlight reaching the eye also keeps changing and so, due to fluctuation of perceived brightness of the star, they appear like they are twinkling.