If LOFTY is coded as LPFUY,then DWARF will be written as

From given question it is clear that the alphabet at odd position from beginning are intact in the code and the alphabet at even positions are replaced by the next alphabets in alphabetical order.
L + 0 = L
O + 1 = P
F + 0 = F
T + 1 = U
Y + 0 = Y
So the code for DWARF is DXASF