Correct option:2) fall - this is the most appropriate option. Here, 'watched' is the second form of 'watch', it means the sentence is in simple past. The sentence structure will be as follows :
watched +
him +
fall
↓
↓
↓
Special Verb
Direct Object
Inf. (– to)
Inf. is the base form of the Verb, Hence the correct sentence will be - I watched him fall.