An action in a sentence can be represented in two ways , namely active and passive voice.
The passive voice always uses the past participle form of the main verb irrespective of any tense. Only the auxiliary verbs depend upon the sentence given in active voice.
The given sentence is in the passive voice.
The correct answer is A)They were laughing at the clown.
Option A) is correct as the subject of the given sentence(the clown) comes in the place of the object (them) and vice versa. Also, the main verb (laughed) is used in the verb+ing form.
Options B, C and D are not correct as at is the correct choice of preposition,'laughed' represents the past tense,( not the past continuous tense), and the object doesn't come in the place of the subject respectively.