Technically, using Option #2 would give you better performance.
Assumptions
1. Primary Router IP: 192.168.1.1
2. DHCP Pool Start: 192.168.1.10
Steps
1) Disconnect your computer from the first router and Connect your Secondary Router to the computer NIC and goto the config page via 192.168.1.1
2) Under Quick Setup / Basic Setup make the following changes
a. Set the IP address as 192.168.1.2 (Make sure this address doesn't fall inside the DHCP range of the 1st Router)
b. Disable DHCP
c. Internet Connection Type to Auto (Mostly found along with the Cable Modem Option)
d. Set SSID to the same SSID as the Primary Router. (This option can be found even under Wireless Settings in some Routers) Depending on which router you own, it might be possible to set a different SSID for the second router. This is ofcourse by Trial and Error. See which one works for you
3) Goto Wireless Settings and set replicate the exact same Security Settings (WPA / WEP)
4) Save and Exit.
5) Connect one of the 2nd routers LAN ports to one of th eLAN ports on the 1st Router.
6) Voila, you should have connectivity. If you don't, reboot both routers once and it should work, else look around for an option in the 2nd router where you can input a Default Gateway address and set the gateway as the IP of the first Router which is 192.168.1.1
Also if you have an option in the second router where you can choose between operation type as Gateway or Router, choose Router.