There are pros and cons to options 1 and 2. Some here have opted for option 1...fade away, while others have opted for number 2, make a stand and DA, or at least walk away without apologizing or compromising, which can lead to DFing in some cases.
I faded. The pros: I'm not DFd/DAd, I still have contact with JW family and some other JWs that I've known for years. I can associate with them without being totally shunned. Over time, I have been pretty much accepted as I am, though I know I'm whispered about behind my back. The cons: It takes a while to complete this process. During the early stages, there were sheparding calls and times of conflict with believing parents/spouse/extended family. Another con: even though I'm out, never to return, there is some amount of JWism in my life as my family are believers and I get the occasional "encouragement". I even got an elder's visit not too long ago. As long as you're living among JWs and you're not DFd/DAd, you will have some aspect of it in your life. You do learn to deal with it and learn when to speak or when to STFU.
Fading is an art that requires patience and knowing that you're going to be ill spoken of from time to time. For me, knowing that my family are victims of the cult, I was willing to face that in order to try to keep family ties together. As long as there was a meeting of minds, somewhere in the middle, then I could bend enough to make it work. Of course over time, they slowly bended as well, though maybe not knowingly.
For some however, fading may not work. Every case is different. If your JW family is so die-hard that they are unwilling to bend at all then option 2 may be the better bet. There is a point where you have to decide that, family or not, these people are a hindrance to your happiness and contentment. Yes, they are cult victims, but if they put the cult so far ahead of family that they are willing to treat you as dead, even when you haven't been DFd/DAd, then it may be time to accept the fate of losing those people to the cult, for the time being anyway, and concentrate on yourself.
Some here can give great examples of how they faded and their lives are fine now. Others continue to struggle. Others can tell you how painful it was at first to DA, but in time, they got over it and now are completely free of it and glad to be while others are free of the religion but still have issues with family and their relentless pursuit of trying to "straighten" them out.
I usually tell people it's their decision on which way to go, but if I had to give advice, I'd say at least try fading and if it creates too many dramas, too much struggle, then it may be best to walk away and let the chips fall where they may.
The one option that I would not even consider and that is no good at all is number 3. Living the lie and pretending. Why let people who are deluded by this cult coerce you to live the same deluded life? Live your life, not theirs. If escaping by fading works, great. If you have to make a firm stand to gain that freedom, that is great as well. Either way, find that freedom. Do NOT allow others force you to live a lie.
BTW, welcome to the forum and good luck on your journey to freedom