Select the best use of a direct quotation.

Nagaina explained that when the house is emptied of people, the mongoose will leave and cobras will rule the garden.
Nagaina, a cobra from the garden, said, “So long as the bungalow is empty, we are king and queen of the garden.”
Nagaina said, “So long as the bungalow is empty, we are king and queen of the garden.”
Nagaina, a cobra from the garden, said, So long as the bungalow is empty, we are king and queen of the garden