The narrator of "The Ransom of Red Chief" himself expresses the situational irony in O. Henry's story: "It looked like a good thing, but wait till I tell you." For, what happens to Sam and especially Bill is deliberately contrary to what they expect and very amusing to readers. They believe the kidnapping of Summit, Alabama's wealthiest man's son should profit them; however, they end up paying the man to take the rapscallion back because the boy "put up a fight like a welterweight cinnamon bear," and later as he pretends to be "Red Chief," he nearly scalps Bill.
In further irony of situation, instead of being frightened by being captured, the boy "seemed to be having the time of his life," talking incessantly during the evening by the campfire as the two men tried to enjoy their meals. When Sam asks the boy if he would like to go home, Red Chief unexpectedly replies that he has no fun at home and hates school and is having a great time camping out with them.
It is a restless sleep that the two men have because Red Chief who lies between them imagines that he hears things and jumps up, reaching for his toy rifle. Early in the morning Sam goes to the peak of the "little mountain" to survey the vicinity:
Over toward Summit I expected to see the sturdy peasants of the village armed with scythes and pitchforks beating the countryside for the dastardly kidnappers. But what I saw was a peaceful landscape dotted with one man plowing with a mule.
Ironically, no one is even searching for the boy. So, Sam and Bill work on a plan for demanding two thousand dollars until Red Chief strikes a blow to Bill's head with his sling shot. In an example of verbal irony, Bill asks Sam,
“Sam, do you know who my favorite Biblical character is?”
“Take it easy,” says I. “You’ll come to your senses presently.”
“King Herod,” says he. “You won’t go away and leave me here alone, will you, Sam?”
The greatest example of irony of situation is the failure of the ransom note to produce the intended results. Instead Ebenezer Dorset replies that he is willing to take his son back if the "two desperate men" will pay him two hundred and fifty dollars and bring the boy in the dark. Bill ironically says he thinks Dorset's offer is "spendthrift" and they should pay it. Sam, too, answers with verbal irony, calling the horribly mischievous boy a "lamb":
“Tell you the truth, Bill,” says I, “this little lamb has somewhat got on my nerves, too.
So, in irony of situation, the exhausted con-men return Red Chief to their father and Sam has trouble catching up to the fleeing Bill.