The correct choice is AutoScalingRollingUpdate. This UpdatePolicy directs CloudFormation to replace instances in the Auto Scaling group in controlled batches and it lets you set MinInstancesInService and MaxBatchSize so you can keep at least five instances serving traffic while the group adopts the new launch configuration.

The AutoScalingRollingUpdate policy performs a rolling replacement of instances so capacity can be preserved during the update. You tune the batch size and the minimum in service to ensure the Auto Scaling group never drops below the required number of healthy instances while new instances launch with the updated configuration.

AutoScalingReplacingUpdate is not appropriate because it triggers replacement of the group or all instances rather than a controlled rolling process which can jeopardize the in-service capacity requirement.

AWS CodeDeploy is a deployment service that manages application deployments and hooks into instances, and it is not a CloudFormation UpdatePolicy for controlling how an Auto Scaling group updates within a template.

AutoScalingLaunchTemplateUpdate is not a valid CloudFormation UpdatePolicy name and so it cannot be used to implement the rolling update behavior required for this scenario.

Full AWS Practitioner Certification Question