Could be all sorts of things. The simple fact is that market makers are being protected against long tail risk while retail investors are being denied long term returns... the very thing they are being paid to do. That's what these put contracts are: long tail risk. They sold an option. Limited risk for long tail risk...

What you are saying amounts to "when long tail stuff happens," order flow agreements, credit lines and clearing agreements that break down."

This, very directly insulates them (Citadel, other contract originators, RH) from the actual risk they are supposedly being paid for. It's also ostensibly the reason why retail investors can't have access to the same vehicles as financial firms. Retail investors can't reliably back that long term risk. Here is yet another example of loss limits for insiders.

No one is saying that you are not right. You are. The contractual complex does melt down at this point. The rage is people who think this is not ok.