Correct option:
Server-Side Encryption with Customer Master Keys (CMKs) Stored in AWS Key Management Service (SSE-KMS)
You have the following options for protecting data at rest in Amazon S3:
Server-Side Encryption – Request Amazon S3 to encrypt your object before saving it on disks in its data centers and then decrypt it when you download the objects.
Client-Side Encryption – Encrypt data client-side and upload the encrypted data to Amazon S3. In this case, you manage the encryption process, the encryption keys, and related tools.
When you use server-side encryption with AWS KMS (SSE-KMS), you can use the default AWS managed CMK, or you can specify a customer-managed CMK that you have already created.
Creating your own customer-managed CMK gives you more flexibility and control over the CMK. For example, you can create, rotate, and disable customer-managed CMKs. You can also define access controls and audit the customer-managed CMKs that you use to protect your data.
Please see this note for more details:

via - https://docs.aws.amazon.com/AmazonS3/latest/dev/UsingKMSEncryption.html
Incorrect options:
Server-Side Encryption with Amazon S3-Managed Keys (SSE-S3) - When you use Server-Side Encryption with Amazon S3-Managed Keys (SSE-S3), each object is encrypted with a unique key. As an additional safeguard, it encrypts the key itself with a master key that it regularly rotates. So this option is incorrect for the given use-case.
Server-Side Encryption with Customer-Provided Keys (SSE-C) - With Server-Side Encryption with Customer-Provided Keys (SSE-C), you manage the encryption keys and Amazon S3 manages the encryption, as it writes to disks, and decryption when you access your objects. So this option is incorrect for the given use-case.
Server-Side Encryption with Secrets Manager - AWS Secrets Manager helps you protect secrets needed to access your applications, services, and IT resources. The service enables you to easily rotate, manage, and retrieve database credentials, API keys, and other secrets throughout their lifecycle. You cannot combine Server-Side Encryption with Secrets Manager to create, rotate, or disable the encryption keys.
Reference:
https://docs.aws.amazon.com/AmazonS3/latest/dev/UsingKMSEncryption.html