The correct option is
A was reading
The given sentence states an action that took place at a particular time in the past "at eight o'clock last night".
Option A: 'Was reading' is a past continuous action. We generally use this tense when the action is happening over a period of time.
The act of 'reading a book' is a long, continuous one. It's not a short one that starts and ends at that time. This is suggested by the words 'at eight... last night'. It tells us that the action began at a particular time, but it does not tell us that it ended.
Option C: 'Read' is a simple past tense verb that states an action that was completed in the past. As explained before, the act of reading isn't a short one, and hence the sentence is not in the simple past tense.
Hence option A is correct and C is incorrect.
Option B: 'Have read' is in the present perfect tense. It states an action
that has just happened in the present. But the action here has already
been completed in the past "last night".
Option D: 'Am reading' states an a present continuous action whereas the event happened in the past.
Hence options B and D are wrong.