The systematic nomenclature of the following spiro compound is :
5-methyl spiro [3.4] octane
7-methyl spiro [3.4] octane
3-methyl spiro [3.4] octane
2-methyl spiro [3.4] octane
Start from a small ring then big ring, so naming will have 3.4
now, Low locants are allocated for substituents. so it would be 5-Methyl not 8-methyl.
The IUPAC name is 5-methyl spiro [3.4] octane.
Therefore, option (1) is correct.