The correct option is C While baking the cookies
An adverb clause is a group of words containing a subject and a verb,
and it functions as an adverb, by modifying an adjective, verb or an
adverb. Adverb clauses generally begin with a subordinate conjunction
(since, because, while, etc.)
Generally, while reducing an adverb
clause to a phrase, the subject is removed and the verb is changed to a
present participle (verb + ing). (If there is an auxiliary/helping verb
attached, it is removed.)
The underlined words form a clause, with the adverb of time "while", the subject "I", verb "was baking" and object "cookies". Hence the sentence needs to be changed and option A is incorrect.
Option C is correct because the subject is removed, hence modifying the adverb clause into an adverb phrase (with the adverb of time intact).
Option B is incorrect because it is still a clause, replacing the adverb 'while' by the adverb 'as'.
Option D is incorrect because the words still form a clause; it has been changed to the passive voice.