In reported speech, the word order and pronouns will be different from the original speech, because the speaker has changed. Accordingly, the tense will also change, in most cases.
The simple present tense in direct speech usually changes to simple past tense in the reported form.
It isn't always necessary to change the tense. The given speech states a daily habit "play baseball daily" which still holds true. Hence the tense remains as present simple.
Option C: 'He plays' is in the present simple, the subject 'I' has changed to 'he' as the narrator has changed. Accordingly, the verb 'play' has also changed to third person 'plays'. Hence C is the correct option.
Option A: The subject and verb changes in reported speech, hence 'I play' is incorrect.
Option B: The verb 'play' in 'he play' is incorrect. When the person changes from first (I) to third (he) point of view, so must the verb.
Option D: 'He played' is in the simple past tense. But, the action takes place on a daily basis, hence the tense does not change to past. So, option D is also incorrect.