The answer is A: gazed at. The verb phrase gaze at replaces the verb watched in the sentence very well because Kimo was watching the waves in hopes of seeing something special. And gazing at means that someone is looking at something for a long time, in admiration and surprise, anticipating, expecting that something will happen.
To blink at - to ignore (something unpleasant)
To glare at - to look with anger
To look at - to direct your eyes toward someone/something.