Which option is better - Pass object to method or not ?

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C#

I have a question regarding passing object to method or creating an object within the method using key value. Which is a better approach ?

Consider below code. In BuilderOrder class there is a method called GenerateKey which needs to access BuilderMaster object. Is it a good idea to pass BuilderMaster object directly as a parameter to the method or pass key value and create BuilderMaster object within method.

public class BuilderMaster
{
    public DTO.BuilderMaster GetBuilderMaster(string systemNo)
    { 
        // rerurn builderMaster object
    }
}

public class BuilderOrder
{
    //Option 1 : Pass systemNo value from UI and create object .
    public bool GenerateKeys(string systemNo,int  noOfKeys)
    {
        BuilderMaster objBuilderMaster = new BuilderMaster();
        DTO.BuilderMaster objThisBuilder =  objBuilderMaster.GetBuilderMaster(systemNo);

        //use objThisBuilder's properties during key generation process.
    }

    //Option 2 : Pass object from UI
    public bool GenerateKey(DTO.BuilderMaster objThisBuilder, int noOfKeys)
    {
        //use objThisBuilder's properties during key generation process.
    }
}

Option 1 creates tight coupling while Option 2 does not.

Now consider GenerateKey is method exposed by a web service which is being called by a web application running on a different machine. Option 1 creates a lighter request object compared to option 2 as in option 1 you are only passing primitive types while in Option 2 you are passing a whole builder master object.

Which is a better approach ?