To a large degree, the article is is correct but it presents a topical approach and ignores the bigger picture. Let's start out with the statement:
When you open an options contract, chances are that you are not trading with another individual investor, but rather with a market maker. You and your counterparty (typically the market maker) are likely creating the options contract -- both the assets and the liabilities they entail -- out of thin air, within the structure of standardized contracts.
That's not true on several accounts. First, new contracts are only created "out of thin air" when both parties are taking opening positions. That results in an increase in open interest. For the majority of near term GME options (where the speculators play), the daily volume exceeds the open interest. That means that a lot of contracts are just changing hands (not being created).
The market maker isn't always the counterparty as the article suggests. In such a situation, retail and institutional traders are involved in GME in every possible way at all prices. Buyers and shorters of the stock. Buyers and sellers of the puts. Buyers and sellers of the calls. It's impossible that
chances are that you are not trading with another individual investor, but rather with a market maker, unless it's an arb with the MM in the middle (see below).
Yes, a gamma squeeze is real but the article implies that the market maker was on the hook for a ton of risk at all times. Unmentioned is that market makers have a number of ways to lay off risk. For example, if the market maker sells you a 20 delta call, he could buy two 10 delta calls.
There are other ways for a market maker to lay off the risk. For example, an arb called a conversion. Suppose there's a put seller and a call buyer of the same series option. If the prices are attractive, the market maker can buy 100 shares, buy the put and sell the call to the aforementioned call buyer in the article and the market maker has zero risk. Yes, he's buying stock, helping to fuel the short squeeze. On the other hand, if there's a put buyer and a call seller, he does a reverse conversion, aka reversal, and does the opposite (short stock, short put and buy call).
Yes, the short squeeze was real and of great magnitude but the article is myopic and has some errors.