Which of the following is the BEST way to defend against network sniffing?

A way to protect your network traffic from being sniffed is to use encryption such as Secure Sockets Layer (SSL) or Transport Layer Security (TLS). Encryption doesn't prevent packet sniffers from seeing source and destination information, but it does encrypt the data packet's payload so that all the sniffer sees is encrypted gibberish.

References: http://netsecurity.about.com/od/informationresources/a/What-Is-A-Packet-Sniffer.htm