To increase disk performance for an application currently utilizing a VM.Standard1.2 compute instance, which two actions can be taken?

Choosing to terminate the instance and create a Dense IO shape is a valid strategy to enhance disk performance. Dense IO shapes are optimized for high input/output operations per second (IOPS) and throughput, making them ideal for applications requiring significant disk performance, such as databases or data-intensive applications. These shapes leverage high-performance block volumes that are designed for workloads that demand low latency and high I/O throughput.

In addition to the Dense IO shape's benefits, this approach often includes the ability to attach more high-performance block volumes, allowing the application to better manage the performance characteristics of the I/O operations. Dense IO shapes also come with a higher number of dedicated OCPUs, which can complement storage performance with increased computational power.

The other options, while they may seem appealing, do not directly address performance enhancement for disk operations as effectively. For example, copying the existing instance to a VM Standard shape does not fundamentally change the disk performance characteristics since it remains under the same standard environment. On the other hand, creating or backing up a larger boot volume, while useful for increased capacity, does not ensure improved performance metrics for the application’s disk workloads.

Thus, transitioning to a Dense IO shape is the most effective option available to significantly enhance disk performance for that given application