# So what is it now - positive butterfly twist

How do you guys remember what a positive twist and positive butterfly is?

positive shift is intuitive - a move up

whoever wrote the text didn’t seem to have a clear understanding either - see errata:

• On page 204, immediately preceding Exhibit 74, the text should read as follows:
A positive (negative) “twist” is a flattening (steepening) of the curve, while in a positive
(negative) “butterfly,” the two ends of the curve move downward upward (upward downward) and the middle of the curve moves upward downward (downward upward). These three empirically derived movements correspond well with the more stylized movements emphasized in the earlier discussion of trading strategies.
On pages 205 and 206, Example 8:
Delete questions 2, 3, and 4 and their solutions, and modify the Solution to 1 to read as
follows:
Although the portfolios all have the same effective duration, the impact of the shift factor
is largest (in absolute value) for the Bullet and smallest for the Barbell. This result reflects the fact that actual shifts in the curve are not parallel. The larger rate increase at the intermediate maturities disproportionately impacts the Bullet portfolio. The flattening twist favors the Barbell as short rates rise and long rates decline—the gains at the long end more than offset losses on the short end. The butterfly also favors the Barbell, which is unaffected by the rise in rates at the intermediate maturities but profits from the decline in rates at the long and short end of the curve.

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The way I remember it is that both the wings go in the same direction and the body goes the opposite.

so, a positive twist means both the wings go up and the body goes down - cuz positive = good = up

and just reverse it for negative. Whichever type of twist it is applies to the wings (the long end of the curve and short end).

youre welcome.

¯\_(ツ)_/¯ It be like that sometimes.

On the 2019 CFAI mock there a butterfly question in the PM section.  It will test your ability to understand multiple concepts, puts, calls, swaps, futures,etc.