The easiest thing to do is to compile the source code into Lua bytecodes using "luac" (Mac and Win versions are included in the SDK). That obfuscates the code and signals that you intend the source to be private. But there are Lua bytecode decompilers that can make it easier for someone to reverse engineer your source.
Well-known plugin author Jeffrey Friedl may encrypt his compiled plugins. I don't know if he's written his own Lua loader or he has backdoor access to internal LR facilities.