Step 1: Know the key property.
For any square matrices, the determinant of a product equals the product of the determinants: $|AB|=|A||B|$. Taking $B=A$ gives $|A^2|=|A|^2$.
Step 2: Why this helps.
Instead of first multiplying $A$ by itself and then finding the determinant, we just find $|A|$ once and square it. This saves work.
Step 3: Write the matrix.
\[ A=\begin{bmatrix}1&2\\2&1\end{bmatrix}. \]
Step 4: Find $|A|$.
For a $2\times2$ matrix $\begin{bmatrix}a&b\\c&d\end{bmatrix}$, the determinant is $ad-bc$. \[ |A|=(1)(1)-(2)(2)=1-4=-3. \]
Step 5: Square it.
\[ |A^2|=|A|^2=(-3)^2=9. \]
Step 6: Pick the option.
The determinant of $A^2$ is $9$, which is option 1.
\[ \boxed{9} \]