Situational irony can be defined as when we as readers are led to believe that one thing is going to happen only to be shocked and surprised when something entirely different or the opposite of what we expect takes place. Situational irony seems to be used by authors to remind us as readers that it is often chance or the unexpected that has the last word in life. O. Henry in this classic short story therefore used situational irony to create an unforgettable and shocking ending, when we realise that both Jim and Della have sacrificed their most valuable possessions to buy something for the other to use with their most valuable possession - Della's hair and Jim's pocket watch, respectively:
For there lay The Combs - the set of combs, side and back, that Della had worshipped for long in a Broadway window. Beautiful combs, pure tortoise shell, with jewelled rims - just the shade to wear in the beautiful vanished hair. They were expensive combs, she knew, and her heart had simply craved and yearned over them without the least hope of possession. And now, they were hers, but the tresses that should have adorned the coveted adornments were gone.
This is the situational irony in this story - Della finally has been given the combs that she has desired for so long, but only when she is not in a position to use them, for she has cut her hair.