A lot of this boils down to having a better understanding of uncertainty and probability, especially in terms of being non-naive when it comes to extreme volatility and risk. If you find ways to bet on this in a rigorous manner, the payoff is disproportionally larger. For the lay investor, the hard part is that this essentially means losing money 95% of the time [in those positions], something most people aren't comfortable with. That and some technical difficulties, like liquidity, etc.

Of course, the bets needs to be sized correctly. This is not something you'd put all your money into, and this is part of the design from the beginning. See Kelly Criterion https://www.amazon.com/KELLY-CAPITAL-GROWTH-INVESTMENT-CRITE... for how these people think about it in a rigorous way.

For those who are interested to read more on how this is done, have a look at the papers here: https://www.universa.net/riskmitigation.html

Spitznagel has also written a book called Dao of Capital which talks about the logic and underlying philosopy of these ideas: https://www.amazon.com/Dao-Capital-Austrian-Investing-Distor...

There's also Dynamic Hedging by Taleb https://www.amazon.com/Dynamic-Hedging-Managing-Vanilla-Opti... which talks about these options and their structure in more technical manner, though I haven't read it.