You can trade on non-public information if you obtain that information unintentionally. Now you have to be able to prove it’s unintentional if the question came up. A real experience example of this is if you work in an office building and your neighboring company, a public company, is being raided by the FBI. Can you use that information to take a position in the market? Yes, according to multiple attorneys we spoke with.

I bring this up because we assume the trading is coming from insiders but I wonder if the parties behind this have baked in a layer similar to my story above.

To close this back to your comment, and I don’t have an answer here: is knowing who the insiders are and acting on that a crime? If you did know and didn’t report them, are you breaking a law? Or worse, you reported it to the deaf ears of a regulator that are focused elsewhere or are under resourced to respond now?

How is there enough volume to cover the other side of the bet with these minutes-before trades?

In theory that is part of what was supposed to have been solved by CAT.

insiders would presumably be bigger trades that show high conviction about improbable events. An insider would wait until the last minute to take advantage of low prices of a market close to expiration.