> Is it manipulation if you're so predictable that an action by me causes you to always act a certain way? And I profit when you take that action?

It depends, but approximately, yes if there was any intent to exploit that fact. See spoofing, other prosecutions for creating short squeezes, etc.

https://dealbreaker.com/2012/06/phil-falcones-alleged-piggis...

The rationale is that markets are better for participants when their prices are accurate and reflect true supply and demand. Price manipulation subverts that, so the SEC disallows it (except in some cases where manipulation is explicitly allowed for historical reasons).

> refused to cover their shorts (I'm probably using the wrong terminology) and left them open, this wouldn't be an issue, no?

This is imprecise; hedge funds might cover short positions to hedge further losses, or because their prime broker might require them to maintain a certain margin (to reduce counterparty risk). I have no experience in institutional investing, so that's a guess.

> Or, conversely, if market makers refused to sell options on overly volatile stocks / stocks being manipulated?

Market makers will increase a premium for options on "overly volatile stocks." If the risk is too high, then they may stop selling the options altogether. But the problem is — it's difficult to predict which next stock WSB might start manipulating. That's another issue. If regulatory agencies don't step in and prevent this type of manipulation, the premiums on all retail-adjacent options will be higher because of the increased risk and fear that a capricious WSB crowd might turn on a MM. That's bad for people who use options "correctly" — not for gambling, but as a way to hedge and reduce risk.