LÖVE

-

Closed-source is actually about licensing, not whether people have the ability to extract readable original source code from a game (which is certainly possible for most popular non-LÖVE indie games.)

There are several ways to obfuscate your Lua code if you're really concerned about people reading it, but again, what they are allowed to do is up to the license you choose (the default in most places is that you have full copyright over your code, in the absence of any explicit license text saying otherwise.)

-

I'd try Squish. It's mainly a minifier but it has the side effect of obfuscation. People will be able to steal it either way, if that's your fear.

Keep in mind obfuscating your code can make it much harder to find bugs which cause Lua errors, since the error message and traceback will likely be incomprehensible. Personally I think the cost of losing proper error messages is much greater than any benefits you get.
All of the non-LÖVE commercial games I know of which use Lua extensively also have very readable Lua error messages.