Answer:
The first option is correct.
Step-by-step explanation:
The first letter in the beginning of a new sentence will always be capitalized. Any names in the sentence will be capitalized as well. This is only true if you are being specific. For example, if you were to say, "I caught a lizard." you wouldn't capitalize lizard; if you were to say, "I caught a Green Anole." you would capitalize the name of the specific type of lizard. For another example, if you were to say, "We went swimming in the lake." you wouldn't capitalize lake because it is a generic term; if you were to say the specific name of the lake, you would capitalize its name and lake (i.e. instead of saying "We went to the lake.", you would say "We went to Lake Okeechobee." or "We went to Lake Tarpon." or "We went to Crescent Lake." or We went to Blue Cypress Lake.".) In this case, you would say, "We went swimming in Cheney Lake."