Correct option is B
The correct indirect speech is (b) They said that they were watching a movie.
Rules of conversion (present continuous → past continuous):
· Reporting verb
said is in the past → apply
backshift.
·
Present continuous (are watching) in direct becomes
past continuous (were watching) in indirect.
· Remove quotation marks and use
that as a conjunction (optional in modern usage).
·
Example:
She said, “I am reading.” → She said (that) she
was reading
.
·
Extra note: If the reporting verb is in the
present, no backshift is needed:
They say, “We are watching…” → They say (that) they
are watching
…