I've been studying Kunen's notes titled 'The Foundations of Mathematics'.
Definition I.8.1 in Kunen says
$z$ is a transitive set iff $\forall y \in z\, [y \subseteq z]$
In the proof of Lemma I.8.6, $\alpha$ is a transitive set and $x,y,z \in \alpha$. Kunen claims that
… we have $x \in y \in z \rightarrow x \in z$ because the $\in$ relation is transitive on $\alpha$ …
But this does not seem to follow from Kunen's definiton of transitivity. Consider $\alpha=\{\emptyset, \{\emptyset\},\{\{\emptyset\}\}\}$. Then it is transitive by Kunen's definition but if we take $x$, $y$ and $z$ to be the three elements in the order given then $x \in y \in z$ but $x \notin z$.
Am I reasoning correctly?
I also have the print edition of the notes and the definition and proof are identical there.
The assumption is that $\alpha$ is not any transitive set, but an ordinal. Which is a transitive set that is well-ordered by $\in$. In particular $\in$ is a transitive relation on $\alpha$ in the usual sense.
You are correct that this reasoning need not apply to arbitrary transitive sets, though.