The correct option is C In a nebula
When nebula or interstellar clouds contract, because of contraction, their density starts increasing and their temperature also starts to increase, and a dense sphere of hot gas is formed from the cloud.
Once the temperature and density at the centre of the sphere increase sufficiently, nuclear energy generation starts. Because of this energy generation, the gas sphere becomes self-luminous and this is how a star is born.
More than one star can be produced by the contraction of a huge interstellar cloud.