Best way to insulate heat duct

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Either would help but take special care. You probably have water pipes down there. If your area freezes hard, you can over-insulate and end up with busted pipe situations for the first time.

If you use the basement at all, adding insulation to the ducts is going to make it appreciably cooler/colder and you may regret adding the insulation. Eiither method you propose should work, but wrapping the ducts means going between the ducts and the floor above and that may be awkward if the duct is close to the floor.

Why would you insulate between the duct and the floor? Seems like it's good to have a warm floor.

I'd be tempted to nail or staple up some fiberglass, under the ducts. Like the man says, also keep an eye on the temp in the cellar, so you don't freeze the water pipes. I'll admit, I hadn't thought of that. The cellar may maintain 55F in the winter, even without the heat runs.

Since your ducts are up high in the ceiling joists, I doubt they provide any heat in the basement if left unwrapped. I would wrap them, especially if you also use your ducts for A/C so they don't condensate. If you want to provide heat in your basement, I would suggest cutting out an opening on the bottom of the duct and putting in a register and forcing the air downwards. Or you probably get better results if you had a portable electric heater or electric baseboard heat down low on the floor. Remember, heat rises.

Your wasting your time...Any heat lost from the duct is just warming you floor....If you were going through an unheated crawl space or some such thing with the floor insulated it would make sense....