So my two year old overheard a arguement ...?

Tell him him those are adult words and he is not to use them.

Say this "The bad words you heard last night when me and daddy were talking are not for little boys to say. Sometimes mommies and daddies say things when they are mad that they dont mean or want you to hear. When you say these bad words you make mommy sad. I don't want to hear you say things like that again, okay?" Keep it extremely simple like that. He's 2. Hopefully he forgets the obscene language.

Ignore it. If he shouts it just keep doing what you're doing. He has learned that it is a powerful word because you react to him saying it differently than you react to him saying other words. Personally, I find it hypocritical of adults to forbid children to say words they say regularly, in their daily life. If you don't want your child to say something, you better not say it yourself.

Spank him and if he says it spank him harder.