Lua: Markov-chain algorithm error

Question

I am trying to run my code, but when I do it, it gives me the error:

input:1: attempt to index a nil value (global 'arg').

I do not know enough to troubleshoot it.

Here is my code:

function allwords()
    local line = io.read()    -- current line
    local pos = 1             -- current position in the line
    return function()        -- iterator function
        while line do           -- repeat while there are lines
            local s, e = string.find(line, "%w+", pos)
            if s then      -- found a word?
                pos = e + 1  -- update next position
                return string.sub(line, s, e)   -- return the word
            else
                line = io.read()    -- word not found; try next line
                pos = 1             -- restart from first position
            end
        end
    return nil            -- no more lines: end of traversal
    end
end

function prefix(w1, w2)
    return w1 .. ' ' .. w2
end

local statetab

function insert(index, value)
    if not statetab[index] then
        statetab[index] = {n=0}
    end
    table.insert(statetab[index], value)
end

local N  = 2
local MAXGEN = 10000
local NOWORD = "\n"

Build table

statetab = {}
local w1, w2 = NOWORD, NOWORD
for w in allwords() do
    insert(prefix(w1, w2), w)
    w1 = w2; w2 = w;
end
insert(prefix(w1, w2), NOWORD)

Generate text

w1 = NOWORD; w2 = NOWORD     -- reinitialize
for i=1,MAXGEN do
    local list = statetab[prefix(w1, w2)]
    -- choose a random item from list
    local r = math.random(table.getn(list))
    local nextword = list[r]
    if nextword == NOWORD then return end
    io.write(nextword, " ")
    w1 = w2
    w2 = nextword
end

How to fix it?