I usually refrain from entering into online debates because it usually devolves into a slugfest, like this. Since you are new to options, let me explain to you how my Greenblatt’s comment made sense.
As you had said, Greenblatt prefers to use long term “call” options on certain undervalued stocks/special situations to limit downside and keep the upside. However, (again, as you have said), stock options are non existent for most small/midcaps, and only the near month expiry contracts are moderately liquid, that too only for large caps. So, how can we get long term dated call options in India?
Well, if you have read about put-call parity, you will know that going long futures and buying put options is mathematically equivalent to going long call options. Thus, if I could buy long term put options on my stocks along with holding them, I would be effectively long call options on my portfolio. I thus use a crude approximation - that the NIFTY will be highly correlated to my portfolio - not an unreasonable assumption (this is also a view shared by most participants in this thread, as they are worried about NIFTY P/E even though their individual stocks are undervalued). Hence buying a NIFTY put effectively plays the part of buying single stock options.
Additionally, if you choose to attack this assumption, I may add, the Implied Volatility of Index Options is significantly lower than single stock ones, so it ends up being a cheaper version of those options or I could use this “relative cheapness” to buy a larger number of puts than my nominal amount of stocks held.
Thus, by going long a portfolio of undervalued stocks and buying long dated NIFTY puts, I am effectively simulating a long call option on my own basket of stocks. I believe that its a good time to get market exposure using call options, given how overvalued the market is, rather than sit in cash or pure equities.