You are missing the key trick - hedging! The person who sold the put to you can short some shares and lend out some money to create a "replicating portfolio" t

You are missing the key trick - hedging! The person who sold the put to you can short some shares and lend out some money to create a "replicating portfolio" that inversely mirrors the payoff of the put option they sold you. They're making a small % on selling the put and then immunising themselves from the market movements. Who lent them the stock to short? Index funds! The people who want to make market returns, still do. Everyone is happy