The correct option is A watching Gerunds are words that are formed with verbs but act as nouns. Gerunds also at times are seen to end in 'ing'. In this particular sentence, the word in the blank acts a noun thus becoming the subject of the sentence and also like a verb by taking up the object. This means that in the blank, we would need a gerund.
Option A: Watching is a gerund as it behaves as a noun in the sentence
Option B: Watch is in the present tense. It is the wrong option
Option C: Watched is the past tense again. It is the wrong option
Option D: On watching is in the continuous tense. It is the wrong option
Option E: Watches is in the perfect present tense and it does not act as a noun. It is the wrong option