If You're Running Update8 Which You Should Be, It's Option 1.
"Cyanogenmod is a customized, aftermarket firmware distribution for select Android devices.
Intended as a replacement for the software (also known as the "firmware" or "ROM") that comes factory installed on your smartphone, CyanogenMod is based on the Android Open Source Project"
More Reading Can Be Found Here:
What is CyanogenMod - CyanogenMod Wiki