It's a simple answer until you throw the 12 month barrier into the mix. Per Fidelity:
“Protective puts” and “married puts” involve the same combination of long stock and long puts on a share-for-share basis, but the names imply a difference in timing of when the puts are purchased.
A “married put” implies that stock and puts are purchased at the same time, and married puts do not affect the holding period of the stock.
If a stock is held for more than one year before it is sold, then long-term rates apply, regardless of whether the put was sold at a profit or loss or expired worthless.
Per the CBOE:
How are protective puts taxed?
If your position in the stock is not eligible for long-term capital gains treatment and you purchase a protective put, your holding period is eliminated. Unfortunately, your holding period will not restart until the put is disposed. However, a put purchase will not affect your holding period if either:
The stock is already eligible for long-term capital gains treatment
The put is “married” to the stock purchase
In either scenario, Qualified Dividend Income (QDI) is forfeited while the put is in place.
- Please be aware of the fact that tax laws and regulations can change and are subject to varying interpretations. Investors should consult with tax advisors for up-to-date tax advice applying to their particular investments.
To further complicate matters, while the married put is exempted from the short-sale rules, it remains unclear whether or not the married put is also exempt from the offsetting position rules (this does not apply to your situation).
So unless you drop the requirement to reach the 12 month mark, there's no solution that I know of.