Theory:

     A cop who was standing near laughed and walked away. Soapy started moving again. When he stopped, he was near several theatres. In this part of the city, streets are brighter and hearts are more joyful than in other parts. Women and men in rich warm coats moved happily in the winter air.
 
     A sudden fear caught Soapy. No cop was going to arrest him.
 
     Then he came to another cop standing in front of a big theatre. He thought of something else to try.
Explanation:
 
A policeman who was standing near laughed at him and walked away without saying anything to him. Soapy continued to walk after that. He eventually stopped walking. At that time, Soapy was standing near several movie theatres. In comparison to the previous areas he had been in, he noticed that the particular streets of the city appeared to be brighter and the people seemed to be having a good time.
 
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A cop laughed at seeing Soapy and walked away
 
Women and men dressed in grand warm coats and moved merrily through the winter air. At that time, Soapy was taken aback by a sudden fear. He was afraid that no police officer would arrest him, and so he could not reach his winter home.
 
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Woman and man dressed in warm coats and walking through the winter air

Soapy then noticed another police officer standing in front of a big theatre and moved closer to him. He thought of trying a new plan. Soapy believed that if he broke any laws, the officer would catch him right away. This was the reason behind Soapy standing near a cop.
 
Meanings of the difficult words:
 
S.No
Words
Meanings
1
TheatreA building or outdoor area in which plays and other dramatic performances are given
2
StreetA public road in a city, town, or village, typically with houses and buildings on one or both sides
3
Joyful Feeling, expressing, or causing great pleasure and happiness
4
Arrest Seize someone by legal authority and take them into custody
5
Fear Be afraid of someone or something as likely to be dangerous, painful, or harmful
Reference:
National Council of Educational Research and Training (2007). An Alien Hand. The Cop and the Anthem- O. Henry(20-29). Published at the Publication Division by the Secretary, National Council of Educational Research and Training, Sri Aurobindo Marg, New Delhi.