Yes, someone is on the other side of the losing trade, but how many people (not firms) do you know who write contracts for short term options?

I personally don’t know any, and I worked at one of the biggest HFT firms for a few years.

The losing side(s) of these positions are heavily hedged, and are happily making money on volume and volatility. (And making record profits this year)

Of course they made money from other traders. But that is precisedly the issue with insider trading - you are taking money from more honest traders.