Let's first change $y \mapsto-y$. Now, the functional equation in the question would be $$f(x)-f(-y)=f\left(\frac{x+y}{1+xy}\right)$$
Also by setting $x=0$ it turns out that $f$ is an odd function, i.e., $f(y)=-f(-y)$. Applying this to the previous equation gets $$f(x)+f(y)=f\left(\frac{x+y}{1+xy}\right)\label{eq1}\tag{1}$$
One way to find $f$ is to note the similarity between the expression $\frac{x+y}{1+xy}$ in equation (\ref{eq1}) and the following property of $\tanh$ function $$\tanh(a+b)=\frac{\tanh{a}+\tanh{b}}{1+\tanh{a}\tanh{b}}$$ By setting $x=\tanh{a}$ and $b=\tanh{b}$, the equation becomes $$\tanh(a+b)=\frac{x+y}{1+xy}$$ Therefore equation (\ref{eq1}) can be rewritten as
$$f(\tanh{a})+f(\tanh{b})=f(\tanh{(a+b)})$$
Obviously $f(u)=\tanh^{-1}{u}$ is a solution; since it cancels out all $\tanh(\cdot)$ functions and then the true statement $a+b=a+b$ will emerge. By using the definition of $\tanh u$ and a few manipulation, you can verify that $$\tanh^{-1}{u}=\frac12\log{\frac{1+u}{1-u}}$$
Moreover, due to the linearity, the function $f(u)=k\tanh^{-1}{u}$, where $k$ is a constant, is a solution either. By setting $k=-2$, you'll find (b) as the correct answer.