The nail stays exactly where it was, one metre from the ground — option 1.

Why. A plant does not grow the way an animal does. Growth in length happens only at the apical meristems, the tips of the shoot and the root; the tissue behind the tip has already stopped elongating. So a tree grows taller by adding at the top, not by stretching its whole trunk. A point one metre up the trunk was laid down long ago and does not move.

What actually happens over the two years. The tree adds height at its crown, and the cambium adds a new ring of wood outside the old one each season. The nail therefore stays at the same height while the trunk grows around it, so that over many years it becomes embedded and eventually hidden. Its height above the ground is unchanged.

The everyday confirmation. A name carved on a tree at eye level is still at eye level decades later, only stretched sideways as the trunk has widened. A barbed-wire fence stapled to a tree is grown over, not carried aloft. Grafting and budding are done at a chosen height precisely because that height will not change.

The contrast with animals. In animals growth is diffuse — cells divide throughout the body, so a mark on the arm of a child does rise as the child grows. In plants growth is localised at meristems, which is why the two behave so differently and why this question is worth asking.

Annual rings are the visible record of the same process: each year’s cambial activity leaves a ring of wood, and counting them gives the tree’s age, the science of dendrochronology.

Hence, the answer is that the nail will remain at same position.