The correct option is -295 m.\n1. Represent the initial depth below sea level as a negative integer: -250 m.\n2. A rise of 75 m means adding 75: $-250 + 75$.\n3. A dive of 120 m means subtracting 120: $-120$.\n4. The arithmetic expression is: $-250 + 75 - 120$.\n5. Evaluate the expression:\n $-250 + 75 = -175$.\n $-175 - 120 = -295$.\nSo, the final depth is -295 m, meaning 295 m below sea level.\nIncorrect options arise from errors in representing 'below sea level' as a negative integer, or incorrect application of addition and subtraction rules for integers, especially when dealing with 'rise' and 'dive'.